Court Opinion

ID: 9549439
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:18:33.071823+00
Date Added: 2024-06-11T15:20:19.379193
License: Public Domain

CARTER, J.
I dissent. The statute involved in this case provides that proof of sales below cost, plus proof of injury to a competitor, is presumptive evidence of intent to injure competitors or destroy competition. In order to have a violation of the act there must be an intent to injure. There is no *124rational or probable conclusion that may be drawn from general experience that the concurrence of selling below cost and injury to competitors points to an intent to injure competitors. The majority opinion proceeds upon the theory that the vital test of the validity of a presumption is whether it is too much of a burden to require the., defendant to rebut that presumption in the light of the asserted balance of convenience in favor of requiring the defendant rather than the prosecution to go forward with the proof. For illustration it is said, after citing Morrison v. California, 291 U.S. 82 [54 S.Ct. 281, 78 L.Ed. 664], “That case designates as the test of permissibility that ‘the state shall have proved enough to make it just for the defendant to be required to repel what has been proved with excuse or explanation, or at least that upon a balancing of convenience or of the opportunities for knowledge the shifting of the burden will be found to be an aid to the accuser without subjecting the accused to hardship or oppression. ’ ” (Italics added.) Whatever may have been the test set forth in the Morrison case it can no longer be said to be the law. The issue of convenience is not the test. The primary question, which involves the issue of due process of law, is whether there is a rational connection between the fact proved and the presumption. In the latest discussion of the subject by the Supreme Court of the United States, that is made clear. It is said in Tot v. United States, 319 U.S. 463, 467 [63 S.Ct. 1241, 87 L.Ed. 1519] :
“The Government seems to argue that there are two alternative tests of the validity of a presumption created by statute. The first is that there be a rational connection between the facts proved and the fact presumed; the second that of comparative convenience of producing evidence of the ultimate fact. We are of the opinion that these are not independent tests but that the first is controlling and the second but a corollary. Under our decisions, a statutory presumption cannot be sustained if there be no rational connection between the fact proved and the ultimate fact presumed, if the inference of the one from proof of the other is arbitrary because of lack of connection between the two in common experience. This is not to say that a valid presumption may not be created upon a view of relation broader than that a jury might take in a specific case. But where the inference is so strained as not to have a reasonable relation to the circumstances of life *125as we know them it is not competent for the legislature to create it as a rule governing the procedure of courts. . . .
“Nor can the fact that the defendant has the better means of information, standing alone, justify the creation of such a presumption. In every criminal case the defendant has at least an equal familiarity with the facts and in most a greater familiarity with them than the prosecution. It might, therefore, be argued that to place upon all defendants in criminal cases the burden of going forward with the evidence would be proper. But the argument proves too much. If it were sound, the legislature might validly command that the finding of an indictment, or mere proof of the identity of the accused, should create a presumption of the existence of all the facts essential to guilt. This is not permissible.
“Whether the statute in question be treated as expressing the normal balance of probability, or as laying down a rule of comparative convenience in the production óf evidence, it leaves the jury free to act on the presumption alone once the specified facts are proved unless the defendant comes forward with opposing evidence. And this we think enought to vitiate the statutory provision.
“Doubtless the defendants in these cases knew better than anyone else whether they acquired the firearms or ammunition in interstate commerce. It would, therefore, be a convenience to the Government to rely upon the presumption and cast on the defendants the burden of coming forward with evidence to rebut it. But, as we have shown, it is not ^permissible thus to shift the burden by arbitrarily making one fact, which has no relevance to guilt of the offense, the occasion of casting on the defendant the obligation of exculpation. The argument from convenience is admissible only where the inference is a permissible one, where the defendant has more convenient access to the proof, and where requiring him to go forward with proof will not subject him to unfairness or hardship. ’ ’ (Italics added.)
The presumption in the instant case has no rational connection between it and the fact proved. It has been held that a statute which raises a presumption of intent to defraud from the circumstance that a laborer accepts property pursuant to a contract of employment and then fails to perform the services is invalid. (Bailey v. Alabama, 219 U.S. 219 [31 S.Ct. 145, 55 L.Ed. 191].) McFarland v. American Sugar Ref. Co., 241 U.S. 79 [36 S.Ct. 498, 60 L.Ed. 899], involved *126a statute making it a crime for engaging in a monopoly in the sugar refining business. It was presumed that a monopoly existed if the person systematically paid a lesser price for sugar in Louisiana than he did in other states. The statute in Manley v. Georgia, 279 U.S. 1 [49 S.Ct. 215, 73 L.Ed. 575], denounced as a crime the fraudulent insolvency of a bank and declared the presumption that a bank which became insolvent was deemed to have become so fraudulently. It was held invalid. Western & Atlantic R. Co. v. Henderson, 279 U.S. 639 [49 S.Ct. 445, 73 L.Ed. 884], dealt with a state statute which declared a presumption of negligence on the part of a railroad company when a collision occurred at a highway crossing between a train and a vehicle. Morrison v. California, 291 U.S, 82 [54 S.Ct. 281, 78 L.Ed. 664], involved the prohibition of the occupation of lands by aliens, and that the state need only prove .that the defendant possessed the land and allege in the indictment or information that he was an alien or ineligible for naturalization. The defendant must prove his citizenship. The court said at page 90:
“Possession of agricultural land by one not shown to be ineligible for citizenship is an act that carries with it not even a hint of criminality. To prove such possession without more is to take hardly a step forward in support of an indictment. No such probability of wrong-doing grows out of the naked fact of use or occupation as to awaken a belief that the user or occupier is guilty if he fails to come forward with.excuse or explanation. . . . Even so, the occasions that justify regulations of the one order have a kinship, if nothing more, to those that justify the others. For a transfer of the burden, experience must teach that the evidence held to be inculpatory has at least a sinister significance. . . .
“We turn to this statute and endeavor to assign it to its class. In the law of California there is no general prohibition of the use of agricultural lands by aliens, with special or limited provisos or exceptions. To the contrary, it is the privilege that -is general, and only the prohibition that is limited and special. Without preliminary proof - of race, occupation of the land is not even a suspicious circumstance.” (Italics added.) Paraphrasing the quotation from the Morrison case, “selling below cost followed by. injury to a competitor ‘is an act that carries with it not even a hint at criminality,’ ” no probability of wrongdoing arises.
*127When the constitutionality of the statute in question was considered by this court the requirement of intent to injure competitors was believed to be necessary to its validity. In Wholesale Tobacco Dealers Bureau v. National Candy & Tobacco Co., 11 Cal.2d 634, 658 [82 P.2d 3, 118 A.L.B. 486], the court stated:
“It is next urged by appellant that every sale below cost, except as provided in section 6, is made unlawful by section 3 regardless of intent, and that so construed the act is unconstitutional. It would certainly add to the weight of appellant’s argument on the main issue if the statute omitted intent as an integral part of the act prohibited. It is one thing, from a legal standpoint, to prohibit sales below cost engaged in for the purpose of injuring competitors and destroying competition, and quite another to merely prohibit all such sales regardless of intent. It ma/y well be that an absolute prohibition regardless of intent would be unreasonable. (See Fairmont Creamery Co. v. Minnesota, 274 U.S. 1 [47 S.Ct. 506, 71 L.Ed. 893, 52 A.L.R 163].)” (Italics added.) Other cases have held that the lack of the requirement of a wrongful intent renders such statutes invalid. (State v. Packard-Bamberger & Co., 123 N.J.L. 180 [8 A.2d 291]; Commonwealth v. Zasloff, 338 Pa. 457 [13 A.2d 67, 128 A.L.R. 1120].)
An analogous presumption under unfair competition statutes has been held invalid. (Great Atlantic & Pacific Tea Co. v. Ervin, 23 F.Supp. 70.)
If the presumption is not available there is no evidence of any intent to injure competitors or destroy competition. There are present only two things: (1) sale below cost, and (2) that defendant sold below cost for some time after the appearance of the last advertisement of his competitors of items below cost. These acts do not give rise to an inference that defendant intended to injure its competitors or destroy competition. On the contrary, the continuance of sales below cost after the last advertisement showed that it was ignoring competition and its competitors. It was endeavoring to build up its own business, a wholly legitimate purpose. Common experience and propensities of man indicate that when a merchant sells below cost he has no thought or intent to injure his competitors. He is merely attempting to develop or preserve his own business, with the thought that his rivals will also prosper. To determine otherwise is to destroy completely the presumption of innocence. It is said in Commonwealth V. *128Zasloff, 338 Pa. 457 [13 A.2d 67, 70, 128 A.L.R. 1120]: “Price cutting in itself is not an evil; on the contrary, the more intense the competition the greater the likely advantage to the purchasing public. Indeed, there is no reason why a merchant should not make an absolute gift of merchandise to his customers if he desires to be benevolent or thereby to advertise his business. There are many other conceivable and wholly proper reasons which might induce him to make sales without profit, as for example, a necessity of paying importunate creditors. It is only when the object of price cutting is sinister,—to destroy a competitor by suffering a temporary loss in order to gain an ultimate monopoly (Mogul Steamship Co., Ltd. v. McGregor, Gow & Co., 23 Q.B.,L.R. 598), or to defraud the public by seducing them into the purchase of. other goods at an exorbitant price—that the selling of goods at less than cost may constitute an economic or social evil The Pennsylvania act, therefore, is arbitrary, and the means it employs are grossly out of proportion to the object which .it seeks to attain.
“There are certain businesses which at one time or another have been regarded by the community as so inherently and generally vicious that the courts have recognized the power of the legislature to suppress them altogether; for example, the manufacture and sale of intoxicating liquors . . . the manufacture of oleomargarine . . . the sale of futures in grain or of stocks on margin . . . and several other types of business referred to in Nebbia v. New York, 291 U.S. 502, 528. . . . But the selling of merchandise below cost is, in general, an innocent and legitimate practice, and subject to abuse only in occasional instances. Under such circumstances it has been uniformly held to be beyond the power of the legislature to effect an absolute prohibition.” (Italics added.)
It should be noted that in the instant case the statute requires a specific intent, as distinguished from a general . criminal intent, that is, an intent to injure competitors or destroy competition. Where a specific intent is required by the statute it may not be inferred merely from the commission of an unlawful act, and the rule that a person knowingly committing an unlawful act shall be presumed to have intended the consequences naturally flowing therefrom is not applicable. It is said in 8 Cal.Jur. 26: “Except in cases of murder, in which a contrary rule is established by statute, wherever a specific intent is an element of an offense, the *129existence of that intent must be established as a fact by such evidence as will warrant a conclusion to that effect by the jury. It is not to be presumed from the commission of the unlawful act, though the jury may infer it from the acts and conduct of the defendant. This is true wherever the crime falls short of homicide, even if it be the crime of assault with intent to commit murder.”
The record discloses that the trial court found: “That the offering for sale, advertising by posters for sale, and selling below cost by [defendant] was done for the purpose of injuring competitors of [defendant] or for the purpose of destroying competition of other merchants.” No evidence was offered which can be said to even remotely support such a finding, and the trial court must have based its conclusion upon the presumption provided for in paragraph 5 of the Unfair Practices Act to the effect that selling below cost is presumptive evidence of intent to injure competitors or destroy competition. In view of my conclusion that the presumption is not available as evidence to support such a finding, it cannot stand. I am therefore forced to the conclusion that in the absence of proof of intent there is no evidence to sustain the findings of the trial court on this issue, and the judgment should therefore be reversed.