Court Opinion

ID: 9681917
Source: CourtListenerOpinion
Date Created: 2023-08-24 08:01:14.313413+00
Date Added: 2024-06-11T18:17:36.631955
License: Public Domain

*169ON REHEARING
SANDERS, Justice;
We granted a rehearing in this case to reconsider our holding that Act 290 of 1964, relating to the sale price of alcoholic beverages, was a valid exercise of the police power. That the holding would have far-reaching effects in the field of price regulation was apparent. But also of concern to us was the assertion, in the dissenting opinions and motion for rehearing, that the Court had departed from its prior decision in Schwegmann Bros. v. Louisiana Board of Alcoholic Beverage Control, 216 La. 148, 43 So.2d 248, 14 A.L.R.2d 680 (1949).
Under familiar principles, of ■course, the statute is presumed constitutional, and plaintiffs have the burden of •demonstrating its constitutional infirmity. Police Jury of Parish of St. Charles v. St. Charles Par. Waterworks Dist. No. 2, 243 La. 764, 146 So.2d 800; State v. Rones, 223 La. 839, 67 So.2d 99; 16 Am.Jur.2d Constitutional Law § 137, p. 336.
As the original opinion fully recites, the .assailed statute establishes minimum prices for the sale of bottled alcoholic beverages 'by imposing mandatory markups from cost upon both the wholesaler and retailer. The markups are stated percentages of the cost price. Depending upon the type of bever.age, the wholesaler’s markup ranges from •ten to eighteen per cent. That of the retailer ranges from ten to thirty per cent. The cost plus the markup is termed the “list price.” The statute prohibits sales below the list, or minimum, price. The general effect of the statute has been to increase the prices of alcoholic beverages.
Plaintiffs attack the statute as a coercive, price-fixing measure, outside the domain of the police power, and violative of the Due Process Clauses of the State and Federal Constitutions. They assert this minimum price statute is substantially the same as Act 360 of 1948, struck down by this Court in Schwegmann Bros. v. Louisiana Board of Alcoholic Beverage Control, supra, and the facts reflected in the record rebut any assumption the statute promotes temperance or any other legitimate object of the police power.
Defendants seek to sustain the statute as one reasonably designed to protect the general health, morals, and welfare of the people and, hence, a proper exercise of the police power.
Our reconsideration of the case has convinced us the price regulation scheme of this statute is substantially the same as that in Act 360 of 1948, previously condemned by this Court. Both statutes fix mandatory minimum markups for wholesalers and retailers. The 1948 statute contains somewhat higher markups. Both statutes prohibit sales below the minimum price.
Appellants suggest the price posting requirement of the 1948 statute .made it a *171price-fixing rather than a minimum markup statute. We, however, are unable to legally distinguish the two statutes on this basis. The price posting requirement of the 1948 statute seems merely an enforcement aid. In any event, the posting requirement was no factor in our 1949 decision. Throughout its opinion, the Court treated the statute as a mandatory minimum markup law and, as such, found it unconstitutional.
We have concluded, as did the eminent trial judge,1 that the two statutes are substantially identical. Hence, the legal principles announced in Schwegmann Bros. v. Louisiana Board of Alcoholic Beverage Control, supra, control here. We have often cited it with approval.2
Quoting approvingly from American Jurisprudence,3 the Court in that case laid down the following rule for testing the validity of a purported exercise of the police power:
“The validity of a police regulation therefore primarily depends on whether under all the existing circumstances the regulation is reasonable or arbitrary and whether it 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. * * *
"It is a general rule that in order for a police measure to be reasonable, the means adopted must be reasonably necessary and appropriate for the accomplishment of the legitimate objects falling within the scope of the power. 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 *173reasonable relation to such objects, or, for more specific examples, t.o 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. The means employed should not go beyond the necessities of the case.
“The mere assertion by the legislature that a statute relates to the public health, safety, or zvelfare does not in itself bring that statute within the police power of a state, for there must always be an obvious and real connection between the actual provisions of a police regulation and its avowed purpose and the regulation adopted must be reasonably adapted to accomplish the end sought to be attained. A stattite or ordinance which has no real, substantial, or rational relation to the public safety, health, morals, or general welfare is a palpable invasion of rights secured by the fundamental law and cannot be sustained as a legitimate exercise of the police power. One application of the familiar rule that the validity of an act is to be determined by its practical operation and effect, and not by its title or declared purpose, is that a constitutional right cannot be abridged by legislation under the guise of police regulation. The exercise of the power must have a substantial basis and cannot be made a mere pretext for legislation that does not fall within it. The legislature has no power, under the guise of police regulations, arbitrarily to invade the personal rights and liberty of the individual citizen, to interfere with private business or impose unusual and unnecessary restrictions upon lawful occupations, or to invade property rights.”
See also City of Alexandria v. Hall, 171 La. 595, 131 So. 722; State v. Blake, 170 La. 175, 127 So. 592; and State v. Legendre, 138 La. 154, 70 So. 70, L.R.A.1916B, 1270.
Act 290 of 1964 contains no legislative findings and enumerates no legislative 'objectives. However, appellants present various arguments to establish a substantial relation between these statutory provisions and the legitimate objects of the police power: public health, morals, and welfare. These arguments may be divided into two main contentions: (1) the statute tends to promote temperance, and (2) the statute tends to prevent price wars and ruinous competition.
Initially, we note the Court rejected the identical contentions in the 1949 Schwegmann decision. The Court concluded the mandatory minimum markups did not tend, in a degree that was perceptible and clear, toward the accomplishment of the legislative purpose, and the mandatory markups were inappropriate for achieving the gen*175eral objects of the police power. Furthermore, we observe no decisive change in the economics or business climate of the liquor industry since our former decision.
Appellants’ argument that the higher prices of the statute promote temperance is unfounded. The statutory price control applies only to “package” sales of distilled spirits and wines. The statute does not purport to regulate the price of alcoholic beverages sold by the drink. Nor does it touch the price of beer. It is true that two of the plaintiffs, large retail distributors, indicated their sales had dropped since the minimum price went into effect. But the suggestion that the statute reduces alcohol consumption is refuted by the evidence. The most plausible explanation in the record was the statute “split up” the business. The district court found it tended to “equalize the business” of competing dealers. It reduced the sales of the large retailer, who had previously been able to sell at a low price because of the cost advantage in quantity-buying. It increased the sales of the small outlet and corner retailer, who then because of the coercive features of the statute sold at the same price as his larger competitor. If the higher markups of the 1948 statute had no real relation to temperance, as this Court held, how can it be postulated that the present statute has?
The contention that the statute tends to relieve critical economic problems in the industry by eliminating price wars and ruinous competition is also without merit. The evidence reflects no deterioration in the economic situation of the industry since 1948. No economic crisis looms. The dealers almost invariably conceded they had prospered under the free enterprise system. Since 1948, the number of retail liquor outlets has substantially increased.
It is true the record reflects some retailers get their stock at lower costs by purchasing in large quantities. It also shows one instance of intensified competition, referred to as a “price war,” in the Shreveport area about two years before the enactment of the present statute. But the situation is no different from that found prior to the 1948 statute. The evidence negates any disadvantage to the public as a whole or threat to the general welfare.
Large quantity-low price purchasing is a common practice in the distribution of most commodities in the free market. Such big-market operations have brought to the American consumer food and clothing at reasonable prices.
Price competition is severely limited in this state by the Unfair Sales Act, LSA-R. S. 51:421-51:427, prohibiting the sale of any merchandise in the regular course of business below cost. The record shows no “ruinous” competition. The competition appellants would have us hold to. be ruinous has been a prime factor in the achievements of American business. More*177over, for the reasons fully assigned in our previous decision, Schwegmann Bros. v. Louisiana Board of Alcoholic Beverage Control, the mandatory markup in the context of this statute is not an appropriate means of preventing price wars. There we said:
“[AJssuming for the sake of argument that liquor price wars are possible of occurrence in this state and that stringent regulations to prevent them are needed, we do not agree that the mandatory markups provided by Act 360 of 1948 constitute appropriate means for the achievement of that purpose.”
Appellants cite numerous decisions in support of the statute. Many of these are inapposite and were carefully distinguished in our previous decision. They rely particularly upon Louisiana Wholesale Distributors Assn. v. Rosenzweig, 214 La. 1, 36 So.2d 403, upholding the Louisiana Unfair Sales Law, and Schwegmann Brothers Giant Super Markets v. McCrory, 237 La. 768, 112 So.2d 606, upholding the Louisiana Orderly Milk Marketing Law. These statutes are dissimilar to the one under attack here. They prohibit sales below cost, composed of the .expense of buying and doing business. The cost of doing business is presumed to be a stipulated statutory percentage in the absence of proof of a lessor cost. The retailer may sell at less than the statutory percentage if his actual cost of doing business has been less. Prohibiting sales below cost is quite different from putting the sales price itself on a steel platform.
We conclude the plaintiffs have discharged their burden of demonstrating the unconstitutionality of the statute. It bears no real or substantial relation to the general health, morals, or welfare of' the people. At best, it represents an ignoble flight from competition. It violates, the Due Process Clauses of the State and Federal Constitutions. We hold it unconstitutional.
For the reasons assigned, the judgment of the district court is affirmed.

. The trial judge said: “I have given a very careful line by line study of Act 360 of 1948 and Act 290 of 1964. * * * I can’t find any essential difference in the particular mandatory provisions, except the differences in percentages of the mark-ups.”

. See City of Baton Rouge v. Rebowe, 226 La. 186, 192, 75 So.2d 239, 241 (1954); Dr. G. H. Tichenor Antiseptic Co. v. Schwegmann Brothers Giant Super Markets, 231 La. 51, 66, 90 So.2d 343, 348 (1956); State v. Birdsell, 235 La. 396, 410, 104 So.2d 148, 153 (1958); Banjavich v. Louisiana Licensing Board for Marine Divers, 237 La. 467, 494, 111 So.2d 505, 515 (1959); Roksvaag v. Reily, 237 La. 1094, 1100, 113 So.2d 285, 287 (1959); Randolph v. Village of Turkey Creek, 240 La. 996, 1003, 126 So.2d 341, 343 (1961) ; State v. Goldfinch, 241 La. 958, 966, 132 So.2d 860, 863 (1961); Department of Highways v. Southwestern Electric Power Co., 243 La. 564, 584, 145 So.2d 312, 319 (1962).

.11 Am.,Tur. Constitutional Law §§ 302 and 303.