Summary
holding that “[i]f the vantage sought is personal as distinguished from the general public then the police power may not be invoked” and that “constitutional law never sanctions the granting of sovereign power to one group of citizens to be exercised against another unless the general welfare is served”
Summary of this case from Alliance of Auto. Mfrs., Inc. v. JonesOpinion
April 5, 1949. Rehearing Denied May 27, 1949.
Certiorari to Circuit Court, Hillsborough County; L.L. Parks, Judge.
J. Lewis Hall, of Tallahassee, and Whitaker Brothers, of Tampa, for petitioners.
Parker, Foster Wigginton, of Tallahassee, and Richard L. Fruchterman, of New York City, for respondent.
S. Henry Harris, of St. Petersburg, Reeves, Allen Johnson, of Tampa, and Ausley, Collins Truett, of Tallahassee, for intervenor-respondent.
Suit for injunction by the Continental Distilling Corporation against Liquor Store, Inc., to enjoin the sale of plaintiff's whiskey at less than minimum retail sales price established under the Fair Trade Act, wherein Webb's City, Inc., was permitted to intervene as a defendant. To review an adverse order, the defendants bring certiorari.
Writ of certiorari issued and order quashed.
If the decision of this case is to rest upon precedents from other jurisdictions then the conclusion is not difficult. We confess they lead to an approval of the act. F.S.A. § 541.01 et seq. Our first duty, however, is to our own constitution as well as the superior federal law. This court has, perhaps more so than many others, been alert to any trespass upon the citizens' constitutional rights. See State v. City of Stuart, 97 Fla. 69, 120 So. 335, 64 A.L.R. 1307. This legislation is a species of the relatively recent national recovery legislation. It was conceived at a time when there were surpluses and general need for such a law in certain basic commodities. The courts approving similar acts scarcely had an opportunity to observe its effects other than as its proponents visualized its operation in futuro. We are in a more favored position as we have the benefit of the actual consequences flowing from its application.
There is yet another reason why we are constrained to reexamine the precedents to the contrary. That is, few of the cases treat the proposition of whether the legislation is within the scope of the police power. The courts generally have accepted the premise of the proponents of the act; that it is in the interest of the general welfare to protect the property right in the trade mark and brand. We may concede, though it is not beyond question and not necessary to discuss here, that the owner of a trade mark and brand has a property right deserving the protection of law. Undoubtedly he has up to a point. Although without this act he has the protection afforded by law in common to all other properties. Is he entitled to more? If he may claim additional advantage, then he must look to the law emanating from the police power. If the vantage sought is personal as distinguished from the general public then the police power may not be invoked. The police power has been wisely restricted to those things which of necessity affect the public morals, public health or public safety. When a statute is brought into question resting upon the police power the courts have the power and duty to inquire whether it is within constitutional limits. To be valid it must apply to the general public as distinguished from a particular group or class. The idea of general welfare should banish the thought that the state may subordinate the right of one group of citizens to advance the welfare of another. The legislature is the judge of the wisdom of the regulation but the court may say whether the act is within constitutional limits. It is particularly a judicial question whether the legislative act is for a private or public purpose. The right to own, hold and enjoy property is nearly absolute. The statute cannot be the means of leveling unequal fortunes, neither can it favor one segment of the people at the expense of another. These principles are fundamental. See 11 Am.Jur., Constitutional Law, Sec. 245 et seq. If the stronger and more influential may impose their wills upon minorities where the general welfare does not require such legislation then the weaker and less fortunate will soon be vanquished. Constitutional law never sanctions the granting of sovereign power to one group of citizens to be exercised against another unless the general welfare is served. The effect of this act is to grant by indirection sovereign power to one person (not necessarily a citizen) to be exercised against another.
This statute is, in fact, a price fixing statute. The power to fix the price is vested in an interested person who is not an official. There is no review of his act. He is required to consult with no one and in no sense is required to take into consideration the cost of the article or the reasonableness thereof. We need look no further than our own jurisdiction for precedents to turn the decision. We have many times been confronted with price fixing statutes in one form or another. Throughout all our holdings we have recognized as basic that for a statute such as this to be upheld there must be some semblance of a public necessity for the act and it must have some relation to the public health, morals or safety. Further, the price fixing agency must be duly constituted by law and due notice of its action. All of which contemplates that the prices fixed must have some regard to reason besides having a public concern. State v. Ives, 123 Fla. 401, 167 So. 394; Scarborough v. Webb's Cut Rate Drug Company, Inc., 150 Fla. 754, 8 So.2d 913; Miami Laundry Co. v. Florida Dry Cleaning Laundry Board, 134 Fla. 1, 183 So. 759, 119 A.L.R. 956. (The latter case related to health and sanitation in the laundry business.)
Many of the precedents from other jurisdictions on similar acts were made upon the proponents' statement that the general welfare would be served. The exact contrary is now perfectly apparent as will appear from a study of Summary and Conclusion of the Federal Trade Commission, December 13, 1946. We quote from Page LXI: "The essence of resale price maintenance is control of price competition. Lack of adequate enforcement of the antitrust laws leaves a broad field for the activities of organized trade groups to utilize it for their own advantage and to the detriment of consumers. * * *"
Some of the states have given a broader sphere of operations to the police power than we have. Some authorities inquire only whether the general welfare is in some measure served. This elevates the state over the individual. Under this concept constitutional guaranties are of no effect to minorities and majorities have no need for them. Then, too, some of the state courts have receded from their holdings because of the United States Supreme Court. See Bourjois Sales Corporation v. Dorfman, 273 N.Y. 167, 7 N.E.2d 30, 110 A.L.R. 1411; Old Dearborn Distributing Company v. Seagram-Distillers Corporation and McNeil v. Joseph Triner Corporation, 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, 106 A.L.R. 1476. The gist of the holding in this case was that the state act did not on the grounds considered contravene the Federal Constitution. The court of last resort of each sovereign state is the final arbiter as to whether the act conforms to its own constitution whereas the federal courts are concerned only with whether the act offends the Federal Constitution. See 11 Am.Jur., Constitutional Law, Section 103.
It is also well to note that when this type of law was first promulgated its purpose was to protect long established brands which had acquired a substantial value. As time passed and one court after another approved them, perhaps because another court had, little if any inquiry was made of the original purpose. Now new brands by the thousands are created overnight to get advantage of the act. It is well to remember also that this act applies to every kind of article including such necessities as food and drugs. In that connection it is enlightening to read fully the Summary of the Federal Trade Commission relative to the means employed by certain retail groups to coerce the manufacturers to fix prices for the retailer's benefit and to the detriment of both the manufacturer and the consuming public.
Our conclusion is that the act is arbitrary and unreasonable and violates the right to own and enjoy property; one economic group may not have the sovereign power of the state extended to it and use it to the detriment of other citizens. In that case the legislation serves a private rather than a public purpose. The sovereign power must not be delegated to a private citizen to be used for a private purpose and especially where there is no state supervision. There is yet another reason why relief should be denied this plaintiff. The answer discloses that this plaintiff is one of about forty subsidiary corporations — all owned and controlled by a parent corporation, Public Industries, Inc., a Pennsylvania corporation; that this parent corporation and four other corporations control eighty to ninety per cent of the alcoholic liquors in the United States; that these several corporations utilize numerous brands and are taking advantage of this act to create monopolies in alcoholic liquors and coerce this intervenor and others to pay arbitrary, excessive and unreasonable prices thereby fixing prices and wholly stifling competition. This allegation is not controverted. His contract is, therefore, contrary to public policy and void, and relief should be denied even though the act is not unconstitutional. The act in terms provides that before a contract can be enforced under it (1) there must be competition between manufacturers or producers of the same general commodity; (2) that competition must be free and open. This plaintiff has not only failed to make a case under the act but the answer makes a complete defense.
The writ is issued and the order is quashed.
TERRELL, HOBSON, and BARNS, JJ., concur.
SEBRING, J., concurs in conclusion and judgment.
BARNS, J., concurs with opinion, with ADAMS, C.J., THOMAS, SEBRING and HOBSON, JJ., concurring.
HOBSON, J., concurs specially with opinion, with ADAMS, C.J., and TERRELL, SEBRING, and BARNS, JJ., concurring.
CHAPMAN, J., dissents.
Plaintiff, Continental Distilling Corporation, brought its injunction suit at Tampa, Florida. The chancellor overruled the several motions by defendants, Liquor Stores, Inc., and Webb's City, Inc., to dismiss plaintiff's bill. The defendants-petitioners now seek a review of such order by certiorari.
The bill alleges that Continental Distilling Corporation is the maker, manufacturer and distributor of whiskies, and in particular is the manufacturer, distiller and owner of the trademark, brand and name of a whiskey known as "Philadelphia Blended Whiskey," which is sold to various wholesalers and retailers throughout Florida and the United States; that the plaintiff-respondent, termed the "owner" entered into a contract with two retail concerns in Jacksonville, Florida, termed the "retailer," who are not parties to the suit, which contract, among other things, provided: " Retailer shall not, directly or indirectly, at any time, offer for sale or sell within Florida any of said beverages which Retailer has heretofore purchased, now has on hand, or may hereafter purchase or otherwise in any way acquire, and which bear, or the labels or containers of which bear, any trademark, brand name, insignia or the name of the said Continental Distilling Corporation, at other than the resale prices therefor to consumers in Florida, or at any other than the terms and conditions of such resales, from time to time designated by Owner; and Owner shall have the right at all times, and from time to time to revise or change any and all such resale prices and terms and conditions of resale, any such revisions or changes to become effective on such date as shall be specified by Owner on not less than two days' prior written notice mailed to Retailer, postage paid, to Retailer's address as herein stated. Such resale prices and terms and conditions of resale shall be in accordance with written schedules furnished from time to time to Retailer by Owner and/or Owner's wholesaler in Florida authorized for the purpose, and such schedules shall constitute a part of this agreement; and at all times the schedule last delivered to Retailer pursuant to this agreement shall govern the resale prices and terms and conditions of resale to consumers. Owner may from time to time list additional goods and brands in any such schedule; with designated resale prices and terms and conditions of resale to consumers, and all the provisions of this agreement shall apply to any and all such additions." (Italics supplied.)
And by Paragraph 6 the bill further alleges: "6. That pursuant to the requirements of Chapter 541, Florida Statutes, Ann., 1941, your complainant established the minimum resale price of `Philadelphia Blended Whiskey' of $4.10 per one-fifth gallon to be charged by all retailers selling direct to the consumers throughout the trade area comprising the State of Florida, which minimum price so established by your complainant is in effect throughout the State of Florida; that on September 1, 1947, October 20, 1947, and March 5, 1948, your complainant addressed to each retail whiskey dealer in the State of Florida a letter advising such dealers that the minimum retail price of `Philadelphia Blended Whiskey' to be charged by them in the retail sale of said whiskey, was the sum of $4.10 per one-fifth gallon, which letters, so addressed and containing the minimum price to be charged for the whiskey above mentioned, were sent through the usual course of the United States mail to the retail whiskey dealers throughout the State of Florida, including the defendant, Liquor Stores, Inc., 812 South Boulevard, Tampa, Florida. (Italics supplied.)
The bill further charged that Liquor Stores, Inc., has violated such agreement by advertising and selling "Philadelphia Blended Whiskey" at $3.49 per fifth, when the price fixed by plaintiff-respondent was $4.10 per fifth, and that the acts and doings of Liquor Stores, Inc., are:
"* * * contrary to the expressed provisions of Chapter 541, Florida Statutes, Ann., 1941 [F.S.A.], and is resulting in irreparable injury and damage to your complainant in the following respects:
"(a) The good will established by complainant through the expenditure of substantial sums of money in advertising its product under the trademark, brand and name of `Philadelphia Blended Whiskey' is being destroyed.
"(b) Other retail liquor dealers who are selling your complainant's products at prices not less than the minimum retail sales price heretofore set and established by your complainant in accordance with the `Fair Trade Act' would be compelled to violate their agreements with your complainant and be compelled to violate the Fair Trade Act by selling your complainant's products below the minimum retail sale price in order to meet the unfair competition created by the acts of the defendant. (Italics supplied.)
"(c) The cutting of prices by the defendant below the minimum retail sales price will cause the public and consumers to believe that your complainant's products, including `Philadelphia Blended Whiskey,' is not worth the uniform minimum retail sales price, in consequence of which said retailers will be unable to sell your complainant's products bearing its trademark, brand and name at the minimum sales price so set and established.
"(d) The public will become confused as to the various brands of such products being sold in open competition with the products distilled and manufactured by your complainant and bearing complainant's trademark, brand and name. * * *"
After the commencement of the suit against Liquor Stores, Inc., the petitioner, Webb's City, Inc., was allowed to intervene as a defendant, who, like Liquor Stores, Inc., appears not to have signed any price fixing contract with the plaintiff-respondent.
The plaintiff-respondent predicates its right to an injunction upon a law enacted in 1939, which is now Chapter 541, F.S. 1941, F.S.A., and known as the "Florida fair trade law," containing provisions relative to price fixing, as follows:
"541.03. Contract may govern price of sale or resale
"No contract relating to the sale or resale of a commodity which bears, or the label or container of which bears, the trade-mark, brand, or name of the producer or distributor of such commodity and which commodity is in free and open competition with commodities of the same general class produced or distributed by others shall be deemed in violation of any law of the State of Florida by reason of any of the following provisions which may be contained in such contract:
"(1) That the buyer will not resell such commodity at less than the minimum price stipulated by the seller.
"(2) That the buyer will require of any dealer to whom he may resell such commodity an agreement that he will not, in turn, resell at less than the minimum price stipulated by the seller.
"(3) That the seller will not sell such commodity:
(a) To any wholesaler, unless such wholesaler will agree not to resell the same to any retailer unless the retailer will in turn agree not to resell the same except to consumers for use and at not less than the stipulated minimum price, and such wholesaler will likewise agree not to resell the same to any other wholesaler unless such other wholesaler will make the same agreement with any wholesaler or retailer to whom he may resell; or
"(b) To any retailer, unless the retailer will agree not to resell the same except to consumers for use and at not less than the stipulated minimum price." Section 541.03, F.S. 1941, F.S.A.
"541.05. Owner alone may establish resale price
"No minimum resale price shall be established for any commodity, under any contract entered into pursuant to the provision of this chapter, by any person other than the owner of the trade-mark, brand or name used in connection with such commodity or a distributor specifically authorized to establish said price by the owner of such trade-mark, brand or name." Section 541.05, F.S. 1941, F.S.A.
"541.07. Suit at law for violation of chapter.
"Wilfully and knowingly advertising, offering for sale or selling any commodity at less than the price stipulated in any contract entered into pursuant to the provisions of this chapter, whether the person so advertising, offering for sale or selling is or is not a party to such contract, and whether the particular lot of such commodity so advertised, offered for sale or sold, was or was not at any time sold to a party to a contract that stipulated the price of such commodity under the provisions of this chapter is unfair competition and is actionable at the suit of any person damaged thereby." Section 541.07, F.S. 1941, F.S.A.
After the enactment during the early and middle '30s by the various states of laws similar to Chapter 541, F.S. 1941, F.S.A., the Federal law was amended as stated in American Jurisprudence, as follows: "Following the pattern of the state legislatures, the Congress of the United States in 1937 enacted a similar statute, commonly referred to as the Miller-Tydings Act [15 U.S.C.A. § 1], by way of amendment to the Sherman Anti-Trust Act [15 U.S.C.A. §§ 1-7, 15 note], declaring in effect that the fixing by agreements of the minimum resale price of such commodities shall not be deemed unlawful by reason of anything contained in the Sherman Act, whenever such agreements are lawful where the resale is made." 52 Am.Jur. — Trademarks, Tradenames, etc., Sec. 177, p. 649.
The statutes relative to price fixing by producers and distributors are applicable only to the commodity as it flows into commerce from producer or distributor to the ultimate consumer through the retailer, and do not relate to cross-agreements between producers or distributors of commodities. "The statute does not legalize horizontal price-fixing agreements entered into between the same class of persons, such as between manufacturers, or between wholesalers or under state and Federal anti-trust acts. The only resale price maintenance permitted by the act is vertical, that is, by agreements entered into between a producer or manufacturer or wholesaler on the one hand and the retailer or other intermediate handler in a straight vertical line on the other. The law does not authorize cross-agreements between competitors, and whatever agreements are permitted all face one way." Id. Sec. 180, p. 651.
The agreements made unlawful and above referred to are termed "horizontal" agreements, but "vertical" agreements by the producer or distributor, or as by him authorized for "price fixing", are made lawful, and also the sale below the stipulated price is termed "unfair competition" and actionable. See Chapter 541, F.S. 1941, F.S.A.
The true legislative intent and purpose of Chapter 541, F.S. 1941, F.S.A. was to permit price fixing by the producers and distributors of the identified commodities, as follows:
Section 541.03, supra, provides that contracts relating to sale or resale of the identified goods shall not be "deemed in violation of any law" by reason of any provision:
"(1) That the buyer will not resell * * * at less than the minimum price stipulated by the seller.
"(2) That the buyer will require of any dealer to whom he may resell * * * that he will not, in turn, resell at less than the minimum price stipulated by the seller.
"(3) That the seller will not sell such commodity:
"(a) To any wholesaler, unless such wholesaler will agree not to resell the same to any retailer unless the retailer will in turn agree not to resell the same except to consumers for use and at not less than the stipulated minimum price, and such wholesaler will likewise agree not to resell the same to any other wholesaler unless such other wholesaler will make the same agreement with any wholesaler or retailer to whom he may resell; or
"(b) To any retailer, unless the retailer will agree not to resell the same except to consumers for use and at not less than the stipulated minimum price."
Section 541.04 prescribes that "for the purpose of preventing evasion of the resale price restrictions imposed" by contract certain specified acts "shall be a violation of such resale price restrictions."
Section 541.05 specified that "no minimum resale price" shall be established except by "the owner of the trade-mark, brand or name used" or by a "distributor specifically authorized to establish said price by the owner of such trade-mark, brand or name."
Section 541.07 prescribes that it "is unfair competition" for anyone to willfully and knowingly advertise for sale or to sell such identified goods "at less than the price stipulated in any" (price fixing) contract entered into pursuant to the provisions of this chapter "whether the person so advertising, offering for sale or selling is or is not a party to such contract, and whether the particular lot of such commodity so advertised, offered for sale or sold, was or was not at any time sold to a party to a contract that stipulated the price of such commodity."
Statutes relating to and prohibiting sales of commodities below cost in certain cases have been enacted and entitled: "Unfair Sales Act," "Unfair Practice Act," and "Fair Sales Act," but we are not now concerned with such a regulation of competition.
The U.S. Supreme Court, in reviewing in the Dearborn-Seagram case a decision of the Supreme Court of Illinois upholding the validity of a similar act under the circumstances then presented, in conclusion stated: "But it is unnecessary to pursue the subject further; for, since the sole purpose of the present law is to afford a legitimate remedy for an injury to the good will which results from the use of trademarks, brands, or names, it is obvious that its provisions would be wholly inapplicable to goods which are unmarked." (Italics supplied.) Old Dearborn Distributing Co. v. Seagram-Distillers Corp., 299 U.S. 183, 198, 57 S.Ct. 139, 146, 81 L.Ed. 109, 106 A.L.R. 1476. And observed, as to relief by the U.S. Supreme Court, that: "There is a great body of fact and opinion tending to show that price cutting by retail dealers is not only injurious to the good will and business of the producer and distributor of identified goods, but injurious to the general public as well. The evidence to that effect is voluminous; but it would serve no useful purpose to review the evidence or to enlarge further upon the subject. True, there is evidence, opinion and argument to the contrary; but it does not concern us to determine where the weight lies. We need say no more than that the question may be regarded as fairly open to differences of opinion. The legislation here in question proceeds upon the former and not the latter view; and the legislative determination in that respect, in the circumstances here disclosed, is conclusive so far as this court is concerned." (Italics supplied.) Id., 299 U.S. text 195-196, 57 S.Ct. at page 145. And thereby gave weight to the statement found in American Jurisprudence as follows: "It has also stated that the action of a State legislature in enacting a police regulation attacked as unreasonable, and of the highest court upholding its validity, indicates the existence of evils for which it is an apparent appropriate remedy." 11 Am. Jur. p. 1080, Sec. 304, citing O'Gorman Young v. Hartford Fire Ins. Co., 282 U.S. 251, 51 S.Ct. 130, 75 L.Ed. 324, 72 A.L.R. 1163.
Public policy of Florida in re price-fixing. — Agreements and contracts tending to fix prices and restrain trade have been unlawful in this State since it became a state. At present Sections 542.01-542.11, F.S. 1941, F.S.A., provide that combinations, confederations and agreements to fix or maintain prices or commodities tending to preclude free and unrestricted competition in the sale of such commodities are made criminal offenses and such agreements are declared invalid and offending the public policy of the sovereign State of Florida, and that the offenders should be subject to fine and imprisonment.
It is further provided by law that: "Any contract or agreement in violation of the provisions of this chapter shall be void and not enforceable either in law or equity." Section 542.10, F.S. 1941, F.S.A. The foregoing statute governing intrastate commerce of Florida corresponds to the Sherman Anti-Trust Act of the Federal Statutes, relating to interstate commerce.
Unfair discrimination has been prohibited in this State since 1915, and the present provisions are:
" 540.01. Unfair discrimination and competition prohibited "Any person doing business in the State of Florida, and engaged in the production, manufacture, sale or distribution of any commodity in general use, that shall, for the purpose of destroying the business of a competitor in any locality, discriminate between different sections, communities, or cities of this state by selling such commodity at a lower rate in one section, community or city, than is charged for said commodity by said party in another section, community or city, after making due allowance for the difference, if any, in the grade or quality and in the actual cost of transportation from the point of production, if a raw product, or from the point of manufacture, if a manufactured product, shall be deemed guilty of unfair discrimination, which is declared unlawful." Sec. 540.01, F.S. 1941, F.S.A.
" 540.06. Unfair commercial discrimination prohibited; penalty:
"Any person, firm, company, association or corporation violating any of the provisions of § 540.01, and any officer agent or receiver of any firm, company, association or corporation, or any member of the same, or any individual, found guilty of a violation thereof, shall be fined not more than five thousand dollars or be imprisoned in the county jail not to exceed one year." Sec. 540.06, F.S. 1941, F.S.A.
The foregoing sections of Ch. 540., F.S. 1941, F.S.A., relating to intrastate commerce of Florida, correspond to the Robinson-Patman Act of the Federal Statutes, 15 U.S.C.A. §§ 13, 13a, 13b, 21a, relating to interstate commerce, as stated in American Jurisprudence, as follows: "A Federal statute known as the Clayton Act [15 U.S.C.A. §§ 12-27], as amended in 1936 by an enactment known as the Robinson-Patman Act, prohibits discrimination between purchasers in respect of the price of commodities marketed through the channels of interstate or foreign commerce, where the effect of such discrimination would be to lessen, injure, or destroy competition or tend to create a monopoly." 52 Am.Jur., Trademarks, Tradenames, etc., Sec. 175, p. 645.
To hold Ch. 541, F.S. 1941, F.S.A., valid would be to say to the petitioners that horizontal agreements and contracts fixing prices or tending to stifle competition are void, as against public policy, and bind no one, and that those who execute them may be prosecuted criminally and subjected to fine or imprisonment and, if a foreign corporation, denied the right to do business in this State or, if a domestic corporation, charter forfeited; however, in respect to the same commodities, that vertical contracts or agreements fixing prices or tending to stifle competition are not only valid and binding on the parties who execute the contract and also upon all who are advised or informed as to the price fixed by the producer or distributor; and, furthermore, he who stifles competition by vertical price fixing may procure the courts to aid him in doing so.
Chapter 541, F.S. 1941, F.S.A., purports to authorize price fixing in the vertical plane of branded or trademarked goods by producers or distributors, but all price fixing of commodities in the horizontal plane is illegal and criminal. See Ch. 542, F.S. 1941, F.S.A.
Section 541.07, supra, specifies that it shall be unfair competition for the retailer-vendee to sell the identified goods for less than the price fixed by the distributor-vendor when the retailer in fact is not a competitor of the producer or distributor, but his patron, either directly or indirectly, and, according to the bill of complaint, the plaintiff is not suffering from any competition between it and the retailer but only because the retailers are in competition between themselves as to a commodity which it once owned and as to a commodity in which it now has no property interest.
It is true that the commodity in question may bear the trademark, brand or trade name of the plaintiff and it is recognized that trademarks, trade names and brands are utilized to promote good will for the purpose of inducing sales, but once the product is sold, with the trade name, trademark or brand on the commodity, then the purchaser becomes the owner of the commodity with the trademark, trade name or brand attached and a part of it, and the producer or distributor no longer retains what he has sold, and the purchaser is entitled to what he has bought, to be dealt with by him as granted by Sections 1 and 12 of the Declaration of Rights and of the Florida Constitution, subject only to the proper exercise of the State and Federal police power in the protection of the property right which the owner of a trademark, trade name or brand may have in franchises, or privileges otherwise conferred by law.
The Supreme Court of the United States recognized that vertical price control was in restraint of trade, as restated in the headnote, as follows: "A system of contracts between manufacturers and wholesale and retail merchants by which the manufacturers attempt to control not merely the prices at which its agents may sell its products, but the prices for all sales by all dealers at wholesale or retail whether purchasers or subpurchasers, eliminating all competition and fixing the amount which the consumer shall pay, amounts to restraint of trade. * * *" Dr. Miles Medical Co. v. John D. Park Sons Co. 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502.
And in reference to the effect as a restraint of trade, the opinion by Chief Justice Hughes stated:
"But agreements or combinations between dealers, having for their sole purpose the destruction of competition and the fixing of prices, are injurious to the public interest and void. They are not saved by the advantages which the participants expect to derive from the enhanced price to the consumer. * * *
"The complainant's plan falls within the principle which condemns contracts of this class. It, in effect, creates a combination for the prohibited purposes. No distinction can properly be made by reason of the particular character of the commodity in question. It is not entitled to special privilege or immunity. It is an article of commerce, and the rules concerning the freedom of trade must be held to apply to it, nor does the fact that the margin of freedom is reduced by the control of production make the protection of what remains, in such a case, negligible matter. And where commodities have passed into the channels of trade and are owned by dealers, the validity of agreements to prevent competition and to maintain prices is not to be determined by the circumstance whether they were produced by several manufacturers or by one, or whether they were previously owned by one or by many. The complainant having sold its product at prices satisfactory to itself, the public is entitled to whatever advantage may be derived from competition in the subsequent traffic." (Italics supplied.) Dr. Miles Medical Co. v. John D. Park Sons Co., supra, 220 U.S. text 408-409, 31 S.Ct. at page 384.
Justice Hughes further stated in the Dr. Miles Medical Co. case that: "The essential features of such a system are thus described by Mr. Justice Lurton (then circuit judge), in the opinion of the circuit court of appeals in the case of John D. Park Sons Co. v. [Samuel B.] Hartman, 6 Cir., 153 F. 24 [42], 12 L.R.A., N.S., 135: `The contracting wholesalers or jobbers covenant that they will sell to no one who does not come with complainant's license to buy, and that they will not sell below a minimum price dictated by complainant. Next, all competition between retailers is destroyed, for each such retailer can obtain his supply only by signing one of the uniform contracts prepared for retailers, whereby he covenants not to sell to anyone who proposes to sell again unless the buyer is authorized in writing by the complainant and not to sell at less than a standard price named in the agreement. Thus all room for competition between retailers, who supply the public, is made impossible. If these contracts leave any room at any point of the line for the usual play of competition between the dealers in the product marketed by complainant, it is not discoverable. Thus a combination between the manufacturer, the wholesalers, and the retailers, to maintain prices and stifle competition, has been brought about." Dr. Miles Medical Co. v. John D. Park Sons Co., supra, 220 U.S. text 399-400, 31 S.Ct. at page 381.
The vertical price fixing by the distributor, arrived at by contract and independent of any statute dealt with by the Dr. Miles-Park Case, was condemned because such acts stifled competition and thereby were injurious to the public interest and void. With the aid of Ch. 541, F.S. 1941, F.S.A., there would be little or no difference in the ultimate effect upon the public under the Dr. Miles-Park contract and under the distiller's contract; the effect upon the public of price fixing agreements is the same whether they be with or without the aid of a statute.
The Florida Fair Trade Act provides, Sec. 541.03, F.S. 1941, F.S.A.: "No contract relating to the sale or resale of a commodity which bears or the label or container of which bears, the trademark, brand, or name of the producer or distributor of such commodity and which commodity is in free and open competition with commodities of the same general class produced or distributed by others shall be deemed in violation of any law of the State of Florida by reason of any of the following provisions which may be contained in such contract." (Emphasis supplied.)
In the case of Scarborough v. Webb's Cut Rate Drug Co., 150 Fla. 754, 8 So.2d 913, 921, we said that price fixing may be sustained on the following basis: "So far as we have been able to find, no statute has been upheld which attempted to compel the producer of a trademarked commodity to enter into contracts with retailers fixing retail prices. Nor do we think that such provision could be upheld because it is contrary to the due process and equal protection clause of both State and Federal Constitutions. Const.Fla. Declaration of Rights, §§ 1, 12; Const.U.S.Amend. 14. This is not all. Price fixing Acts have been upheld only upon the theory that such may be resorted to to protect the interest of the public and to prevent destroying competition in businesses or vocations, the success of which is materially affected with public interest. * * * (Emphasis supplied.)
The purpose of such price fixing then was to prevent ruinous competition. Price fixing is legal when it is to the public interests and is accomplished by lawful means. Such competition can exist only in times of over-production, resulting in cutthroat competition for the available potential markets. It was not contemplated by the Legislature of 1939 that this Act would operate in periods of scarcity of consumer goods when there were not enough consumer goods to satisfy the demands of the public, with the same effect as in periods of over-production and abundance.
It is well recognized that a law under one state of facts may be reasonable but under another state of facts may be unreasonable. The public need of the Unfair Competition Act during the early and middle '30s reflects reasonableness, and they do not appear so unreasonable for those times. These so-called Fair Competition Acts were enacted during the '30s and began in California in 1931, during a period when the entire United States was undergoing one of the most severe and prolonged depressions that the country had ever experienced, with a deflated currency as relating to purchasing power; when the inventories of the wholesale and retail merchants were high, the factories were idle, and unemployment of labor was great; and when credit policies had become restricted, all of which had resulted in an economy of abundance of goods and an economy of scarcity as to purchasing power; with many bankruptcies occurring and with business generally operating with a fear of bankruptcy and with the banking situation becoming so serious that the President called closed all of the banks in one day and allowed only the reopening of such banks as were liquid enough to withstand runs. Conditions then were such that, in order to remedy the imbalance between commodities and purchasing power, pigs were killed and cotton and corn were plowed under; that grain was at times used by the producers for fuel instead of being sold at the market price. It was a time when the maxim that "competition is the life of trade" had been supplanted by the term "ruinous competition" because of the general down-trend of prices, which was resulting in retail sales below cost.
"In a recent case the U.S. Supreme Court has held that the reasonableness of the exercise of the police power of the state must be considered in the light of the current economic conditions." 11 Am.Jur. 1080, citing West Coast Hotel Co. v. Parrish, 1936, 300 U.S. 379, 57 S.Ct. 578, 585, 81 L.Ed. 703, 108 A.L.R. 1330.
In the Parrish case, supra, the U.S. Supreme Court, per Justice Hughes, stated:
"We may take judicial notice of the unparalleled demands for relief which arose during the recent period of depression and still continue to an alarming extent despite the degree of economic recovery which has been achieved. It is unnecessary to cite official statistics to establish what is of common knowledge through the length and breadth of the land. While in the instant case no factual brief has been presented, there is no reason to doubt that the state of Washington has encountered the same social problem that is present elsewhere."
The Florida Fair Trade Act wisely provided that before anyone could enforce that Act as against another, certain conditions must exist. Those conditions are: (1) There must be competition between producers or manufacturers of the same general commodity; and (2) that competition must be free and open.
The present conditions are now somewhat reversed as to those of 1939 and most of the preceding ten years. We now have a dearth of goods where we had an abundance in the '30s; and we have money without purchasing power, where money had a high purchasing power during the '30s. As under those conditions the fixing of a minimum sales price was considered within the police power of the State, the fixing of maximum sales price might now be considered within the police power, e.g., OPA.
It is common knowledge that the world in 1945 emerged from a long drawn out conflict, resulting in acute shortages in many items of commerce. The demand for some of those items has not yet been saturated by over-supply. So long as the prerequisite conditions of free and open competition as to the particular commodity do not exist, any contract attempted to be made under the provisions of the Fair Trade Act is void, as being contrary to public policy. It cannot be successfully contended that competition exists in a particular product when there has been a shortage of that product over a period of years and that shortage has not yet been overcome. It is not in the public interest that the Florida Fair Trade Act should be enforced on behalf of any manufacturer of a product in which there is no competition or in which the competition is not free and open as to price.
Those who attempt to enforce the provisions of this or any other Act of the Legislature must allege and prove that all prerequisite conditions have been complied with or that these conditions exist for the effective operation of the statute. It becomes necessary therefore for plaintiff to allege and prove not only that there was a contract but also as to the commodity in question, that there was free and open competition. That is a factual element that must be established before the contract may become effective, and before it may be enforced.
A producer or distributor may, by price fixing to remove competition between retailers as to "price" of a commodity, effectively remove such commodity from the status of "free and open" competition of the market as to market price. Under present conditions, contracts fixing a minimum sales price of commodities involved in the vertical or horizontal plane would be considered as a restraint upon free and open competition unless the contrary is shown.
Relative to classification, the U.S. Supreme Court, in the Hartford-Harrison case, held that a statutory discrimination between the mutual companies and the stock companies which write fire, casualty, etc., insurance in the State, forbidding stock companies to act through agents who are their salaried employees but permitting this to mutual companies, is repugnant to the equal protection clause of the Fourteenth Amendment, and that:
"The applicable principle in respect of classification has often been announced. It will suffice to quote a paragraph from Louisville Gas Electric Co. v. Coleman, 277 U.S. 32, 37, 38, 48 S.Ct. 423, 425, 72 L.Ed. 770: `It may be said generally that the equal protection clause means that the rights of all persons must rest upon the same rule under similar circumstances * * * and that it applies to the exercise of all the powers of the state which can affect the individual or his property, including the power of taxation. * * * It does not, however, forbid classification; and the power of the state to classify for purposes of taxation is of wide range and flexibility, provided always that the classification "must be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike." * * * That is to say, mere difference is not enough; the attempted classification "must always rest upon some difference which bears a reasonable and just relation to the act in respect to which the classification is proposed, and can never be made arbitrarily and without any such basis." * * * Discriminations of an unusual character especially suggest careful consideration to determine whether they are obnoxious to the constitutional provision. * * *'
"Despite the broad range of the state's discretion, it has a limit which must be maintained if the constitutional safeguard is not to be overthrown. Discriminations are not to be supported by mere fanciful conjecture. Borden's [Farm Products] Co. v. Baldwin, 293 U.S. 194, 209, 55 S.Ct. 187, 191, 79 L.Ed. 281. They cannot stand as reasonable if they offend the plain standards of common sense." Hartford Steam Boiler Inspection Ins. Co. v. Harrison, 301 U.S. 459, 461, 462, 57 S.Ct. 838, 839, 81 L.Ed. 1223.
The validity of legislative classification depends upon the object and purpose of the law and the legal effect thereof according to the circumstances.
"When the classification made by the legislature is called in question, if any state of facts reasonably can be conceived that would sustain it, there is a presumption of the existence of that state of facts, and one who assails the classification must carry the burden of showing by a resort to common knowledge or other matters which may be judicially noticed, or to other legitimate proof, that the action is arbitrary. * * * The principle that the State has a broad discretion in classification, in the exercise of its power of regulation, is constantly recognized by this Court. Still, the statute may show on its face that the classification is arbitrary (Smith v. Cahoon, 283 U.S. 553, 567, 51 S.Ct. 582, 75 L.Ed. 1264) or that may appear by facts admitted or proved. * * * Or, after a full showing of facts, or opportunity to show them, it may be found that the burden of establishing that the classification is without rational basis has not been sustained. * * * But where the legislative action is suitably challenged, and a rational basis for it is predicated upon the particular economic facts of a given trade or industry, which are outside the sphere of judicial notice, these facts are properly the subject of evidence and of findings." Borden's Farm Products Co. v. Baldwin, 293 U.S. 194, 209-910, 55 S.Ct. 187, 192, 79 L.Ed. 281.
This Court has held that the provision that all men are "equal before the law" has been generally interpreted to mean that: "* * * the rights of all persons must rest upon the same rule under similar circumstances and that it applies to the exercise of all the powers of the state which can affect the individual or his property including the power of taxation. It does not however forbid classification and the power of the State to classify for purposes of taxation is of wide range and flexibility, provided always that the classification must be reasonable, not arbitrary, and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation, so that all persons similarly circumstanced shall be treated alike. Mere difference is not enough; the attempted classification must rest upon some difference which bears a reasonable and just relation to the act in respect to which the classification is proposed and can never be made arbitrarily and without any such basis." State ex rel. Vars v. Knott, 135 Fla. 206, 211, 213, 184 So. 752, 754.
To be "equal before the law" does not preclude the state from resorting to classification, provided the classification is reasonable, not arbitrary, and rests on some ground of difference having a fair and substantial relation to the object of the legislation. The classification, in order to avoid the constitutional mandate, must be founded upon pertinent and rational basis and not upon a capricious and unreasonable basis.
A state may not prohibit and make punishable those who enter into agreements in restraint of trade or which tend to restrict competition and then grant immunity to a class consisting of those who enter into vertical contracts and agreements having the same obnoxious impact upon the public interest. It is the effect of the contract or agreement that is to be considered.
When it is determined that contracts in restraint of trade are injurious and offensive to an interest which the state is entitled to protect, and legislation is enacted to protect that interest, then special privileges or immunities cannot be granted unless the granting of such special privileges and immunities is to serve the public interest or purpose as distinguished from a private interest or purpose.
The special privileges and immunities granted plaintiff-respondent, Ch. 541, supra, under present economic conditions and statutory laws serve a private interest and contravene the constitutional guaranties.
Sections 1 and 12 of the Bill of Rights of the Constitution of Florida (as well as the Fourteenth Amendment to the U.S. Constitution) require that all shall stand "equal before the law" and that "no person shall * * * be deprived of life, liberty, or property, without due process of law; nor shall private property be taken without just compensation." It seems obvious that such arbitrary selections for legislative favor as are contained in the Fair Trade Act were precisely what the constitutional provisions were designed to prevent.
The legislature has designated selling below the fixed price to be "unfair competition" (Sec. 541.07) for anyone, whether the person "selling is or is not a party to such contract * * *" and "actionable at the suit of any person damaged thereby."
"Equity regards substance rather than form." The mere designation of an act as "unfair competition" does not preclude judicial appraisal, and courts of equity will not be misled by mere devices or baffled by mere forms, but they will disregard names and penetrate disguises of form to discover the substance of an act or transaction. The bill fails to set forth facts sufficient to show unfair competition in fact.
For a court of equity to entertain plaintiff-respondent's bill would be to uphold and honor the special privileges and immunities attempted to be conferred by the statute when generally other acts of like force and effect are proscribed and made penal.
The writ of certiorari should issue and the order of the chancellor should be quashed.
It is my view that legislation of the type under consideration here (which is essentially price fixing of the worst character, i.e. the fixing of a minimum price floor as distinguished from a maximum price ceiling without a yardstick for the establishment of such minimum price or any provision for public notice or hearing) may be valid but it is so only when emergencies which threaten the general welfare require its enactment. Such condition should be real and not fanciful. Resort to the drastic expedient of invoking the police power of a sovereign state by the passage of legislation of this character should not be permitted in the absence of concrete evidence of public necessity.
Some of the situations which the writer can now envisage which may give rise to valid legislation of this class are the exigencies of war or threats of economic chaos. In the former of these suggested fundamental bases, the problem presented by such emergencies would appear to be one which should evoke Federal action rather than legislation by any or all of the several states. This is true, broadly speaking, in the latter of these indicated premises. However, recognition must be given to the fact that a major industry which affects the general welfare, located in only one state, could be on the verge of economic calamity and if such be determined to be the fact that state might then find justification for remedial legislation.
It is true that courts of last resort in several states and the Supreme Court of the United States have upheld acts similar to this so-called Fair Trade Act. The fact that those laws were either enacted at a time when we were experiencing a depression national in its scope or were challenged when such was our economic status, is worthy of serious consideration in connection with the present litigation.
If not actually essential, by far the better procedure and that fraught with less danger of non-essential invasion of constitutional rights of the consumer and the retail merchant would be the finding as a predicate for such legislation that extremities requiring it exist as a matter of fact. If well founded, this would assure validity at the time of its enactment, but would not necessarily guarantee its permanency as valid legislation. The basis for such law actually should be present not only at the time of its passage but the law should exist only so long as the situation which gave rise to it continues. The duration of its existence should be from one legislative session to the next, at which time the law could be reenacted if the necessity for it should still subsist. Without appropriate predicate, legislation of this kind is unconstitutional from its inception and absent a limitation on its life span it might become so by virtue of changed or improved conditions.
The validity of such legislation can be founded only upon, what was termed in the ancient days of the Roman Empire, the summum bonum — the greatest good for the greatest number — and what we now call general welfare. It is solely upon such premise that a legislative enactment, which is flagrantly violative of the established law of contracts, which destroys initiative on the part of the retail merchant and affects adversely the economic life of the common man and which portrays monopolistic, if indeed they are not communistic, tendencies, can be sustained. Under normal conditions such legislation is not consonant with our philosophy and fundamental principles of government as I understand that philosophy and those principles. It is not truly a "Fair" Trade Act so far as its effect upon the consuming public is concerned, but actually it is "unfair" and unconstitutional.
It is the failure to first investigate and make a determination of public necessity which causes such legislation to be fraught with shocking possibilities. An act of this type must be subjected to close scrutiny with respect to its constitutionality. Its genesis must find justification in, and its life depend upon, public necessity. By this I mean that the subject of the act and the purposes to be accomplished by it should bear, in a vital and practical sense, a reasonable relationship to the public health, safety, morals or similar element which is fundamentally and essentially a component part of the general welfare. Otherwise, a law of this nature not only offends certain constitutional provisions but it is also inimicable to some of our elementary democratic principles. It stifles individual initiative and allows no premium upon the personal ingenuity and efforts of the successful merchant — as distinguished from the lethargy of the mediocre — and sometimes, as here, it violates the basic law of contracts.
The very technical and finespun theory of vertical contracts as differentiated from those which are horizontal does not appeal to, satisfy nor indeed protect the average citizen. He does not appreciate nor understand why the interest of the consuming public, which group is comprised of a vast majority of our people, should be subservient to the property right of the individual owner of a trade-name, mark or brand. It appears to the writer that his reasoning is sound. Admitting the existence of such property right the welfare of the "greatest number" should take precedence over that of a favored few if a choice must be made which will invade or infringe the constitutional guaranties of either group. The average citizen of whom I speak, the common man, if you please, believes in free enterprise, that "competition is the life of trade", and that the principles of supply and demand and of building a "better mousetrap" have contributed in no small measure to making this Nation great.
If we are to have a "controlled economy" there may be a place for laws of the type here under consideration. But as I understand a "controlled economy" it should not exist absent emergencies which require it in the interest of the general welfare. In any event, a law which provides for the fixing of minimum prices should contain a yardstick as a guide for the establishment of such ground level prices.
The power to determine those prices should not be left to the unleashed discretion of the trade-name owner but should be confined within impregnable specified boundaries. A definite measuring stick should be set forth in the body of the act. This statute contains no such rule. No checkrein is included therein. The unrestrained whim or fancy of the trademark owner is the only criterion. There is no provision for the public to be heard or the public interests to be considered much less protected.
The law is not aimed directly at the "loss leader" problem. It goes far beyond such point. As I comprehend the expression "loss leader" it means that a retail merchant may advertise a well known trade-marked article for sale at less than cost to entice patrons to his establishment, who, while there, might purchase other merchandise upon which the retailer makes a profit and thereby more than overcomes his loss. If this or any such law should, by its express terms, only prohibit the "loss leader" practice it might be less offensive. We are not now confronted by such an act.
According to one of the parables contained in Holy Writ, a vineyard owner hired some laborers early in the morning at a penny a day. Others were employed, and came to work, later. At the end of the day the employer paid all of them the same wage. He was severely criticized. The answer which he gave was: "Is it not lawful for me to do what I will with mine own? Is thine eye evil because I am good?" Matthew 20:15. This philosophy is currently as fundamentally sound as it was in Biblical days. But it is suggested a trade-marked article does not actually or in every sense belong to the retailer who purchases it for resale because the trademark owner has a property right in the trade-mark and the good will, which may attach thereto, is his.
Let it be granted, as it should and must be, that our Constitutions do expressly provide protection to the property rights of every individual, just how far does such protection as intended by the Constitution of Florida extend? Is the theoretical protection provided by this act really contemplated by our constitutional guaranties? What is, or should be construed to be, the scope of the protection which is provided by our constitution to the property rights of the individual? Is such protection a shield or is it a sword which can be used to pierce and draw the life blood from the constitutional rights of others who constitute by far the greater number of our citizens? It is my opinion that it should become a sword only in the event it is essential to the survival of the economic life of this body of free people. Laws of this character should not be passed under the pretense of protection to the property rights of the individual trade-name owner or in the alleged interest of the general welfare unless such protection is necessary or the general welfare really requires their enactment.
The owner of a trade-name, mark or brand does not need such protection — particularly when it transgresses the rights of others — because he has it within his power to protect himself. He need not furnish his product to the retailer who refuses to agree to his minimum resale price.
But it is said an agreement between the trade-name owner and the individual retailer is both impractical and unlawful. Impracticability is no excuse, much less reason, for a law of the type now before us. Some method of distribution which would make such an agreement practical of accomplishment should be devised instead of creating an iniquitous law that violates the constitutional rights of other citizens. If the suggestion that agreements between retailers and trade-name owners are unlawful be well founded, a law directed solely to the correction of this situation, as in the case of the "loss leader" problem, should provide the panacea.
Why should the trade-name owner have protection, which he does not need, at the expense of the consumer? The statement was once made and it is profound that "When reason and the law part there is no law". When I contemplate the means employed by many selfish interests to bring about the ends which they desire my mind reverts to Cicero's outburst in one of his orations against Catiline when he said: "To what length wilt thou abuse my patience; to what extent wilt thy unbridled audacity affront itself?"
Such legislation is constitutional and can be constitutional only in extreme situations wherein our economic structure is seriously endangered. In some periods through which this Nation has passed no one should have questioned the propriety of such drastic measures for blood transfusions probably were essential to the preservation of a healthy body politic. It is another thing, however, to foist such legislation upon the general public in normal times under the guise of ultimate protection and benefit to the public when exigencies which might demand it are nonexistent.
It is my conclusion that the enactment of this law, which contains a provision for the fixing of minimum resale prices and provides that parties not parties to a contract must nevertheless be bound by such contract, was an unwarranted, unreasonable and arbitrary exercise of legislative power and should be declared invalid.
ADAMS, C.J., and TERRELL, SEBRING, and BARNS, JJ., concur.
Challenged on this appeal on various grounds is the constitutionality of Florida's "fair trade law" authorizing contracts establishing resale prices on commodities bearing "trade-marks, names or brands", which is Chapter 19201, Acts of 1939, Laws of Florida, or Sections 541.01 to 541.08, inclusive, F.S.A.
The Act is viz.:
"541.01. Short title of chapter. This chapter may be known and cited as the `Florida fair trade law'.
"541.02. Definition of terms used in chapter. The following terms, as used in this chapter, are defined as follows:
"(1) `Commodity' means any subject of commerce.
"(2) `Producer' means any grower, baker, maker, manufacturer, bottler, packer, converter, processor or publisher.
"(3) `Wholesaler' means any person selling a commodity, other than a producer or retailer.
"(4) `Retailer' means any person selling a commodity to consumers for use.
"541.03. Contract may govern price of sale or resale. No contract relating to the sale or resale of a commodity which bears, or the label or container of which bears, the trade-mark, brand, or name of the producer or distributor of such commodity and which commodity is in free and open competition with commodities of the same general class produced and distributed by others shall be deemed in violation of any law of the State of Florida by reason of any of the following provisions which may be contained in such contract:
"(1) That the buyer will not resell such commodity at less than the minimum price stipulated by the seller.
"(2) That the buyer will require of any dealer to whom he may resell such commodity an agreement that he will not, in turn, resell at less than the minimum price stipulated by the seller.
"(3) That the seller will not sell such commodity:
"(a) To any wholesaler, unless such wholesaler will agree not to resell the same to any retailer unless the retailer will in turn agree not to resell the same except to consumers for use and at not less than the stipulated minimum price, and such wholesaler will likewise agree not to resell the same to any other wholesaler unless such other wholesaler will make the same agreement with any wholesaler or retailer to whom he may resell; or
"(b) To any retailer, unless the retailer will agree not to resell the same except to consumers for use and at not less than the stipulated minimum price.
"541.04. Inducements to evade contract restrictions prohibited. For the purpose of preventing evasion of the resale price restrictions imposed in respect of any commodity by any contract entered into pursuant to the provisions of this chapter (except to the extent authorized by said contract):
"(1) The offering or giving of any article of value in connection with the sale of such commodity.
"(2) The offering or the making of any concession of any kind whatsoever (whether by the giving of coupons or otherwise) in connection with any such sale; or
"(3) The sale or offering for sale of such commodity in combination with any other commodity, shall be a violation of such resale price restrictions, for which the remedies prescribed by § 541.07 shall be available.
"541.05. Owner alone may establish resale price. No minimum resale price shall be established for any commodity, under any contract entered into pursuant to the provision of this chapter, by any person other than the owner of the trade-mark, brand or name used in connection with such commodity or distributor specifically authorized to establish said price by the owner of such trade-mark, brand or name.
"541.06. Exceptions. No contract containing any of the provisions enumerated in § 541.03 shall preclude the resale of any commodity covered thereby without reference to such contract in the following cases:
"(1) In closing out the owner's stock for the bona fide purpose of discontinuing dealing in any such commodity and when plain notice of the fact is given to the public; provided the owner of such stock shall give to the producer or distributor of such commodity prompt and reasonable notice in writing of his intention to close out said stock, and an opportunity to purchase such stock at the original invoice price.
"(2) When the goods are altered, secondhand, damaged, defaced or deteriorated and plain notice of the fact is given to the public in the advertisement and sale thereof, such notice to be conspicuously displayed in all advertisements and to be affixed to the commodity;
"(3) By any officer acting under an order of court.
"541.07. Suit at law for violation of chapter. Willfully and knowingly advertising, offering for sale or selling any commodity at less than the price stipulated in any contract entered into pursuant to the provisions of this chapter, whether the person so advertising, offering for sale or selling is or is not a party to such contract, and whether the particular lot of such commodity so advertised, offered for sale or sold, was or was not at any time sold to a party that stipulated the price of such commodity under the provisions of this chapter is unfair competition and is actionable at the suit of any person damaged thereby.
"541.08. Law not applicable to certain contracts. This chapter shall not apply to any contract or agreement between or among producers or distributors or (except as provided in subsection (3) of § 541.03 between or among wholesalers, or between or among retailers, as to sale or resale prices."
The bill of complaint alleged, in substance, that the Continental Distilling Corporation was engaged in the business of distilling and selling intoxicating liquors in the State of Florida and other States of the Union, and one of its products was trade-marked as "Philadelphia Blended Whiskey". It is alleged further that in the conduct of its business, the plaintiff under the provisions of the aforesaid Act entered into two contracts with certain retailers in Jacksonville, Florida, by the terms whereof the trade-marked product of the plaintiff known as "Philadelphia Blended Whiskey" should be retailed in the State of Florida at the price of $4.10 per one-fifth gallon. The plaintiff alleged that it notified the Liquor Stores, Inc., of the execution and existence of the two contracts wherein the retail price of the trade-marked product "Philadelphia Blended Whiskey" was fixed at $4.10 per one-fifth gallon, but the defendant Liquor Stores, Inc., continued to advertise and sell the trade-marked whiskey supra at $3.49, being a sum less than $4.10 per one-fifth gallon, contrary to the two retail contracts which fixed the retail price under the "fair trade law".
One of the petitioners here applied for and, by appropriate order, was permitted or allowed to file in the court below such a pleading in the cause as any other defendant and pursuant thereto the Webb's City, Inc., filed an answer to the bill of complaint and also a motion to dismiss on several grounds. Likewise the Liquor Stores, Inc., filed a motion to dismiss and the cause was heard by the Chancellor below on the motions of the defendant to dismiss directed to the bill of complaint. Extensive and able arguments were presented to the Chancellor on the issues made by the pleadings and thereafter an order was entered overruling the motions to dismiss and the effect thereof was to sustain the constitutionality of Sections 541.01 to 541.08, inclusive, F.S.A.
The questions posed here for adjudication are viz.:
1. Where the Legislature enacts a law in the exercise of its police power, in order to be valid and constitutional, must not such statute bear a reasonable or rational relation to the protection of the public health, morals, safety or welfare?
2. Where, in the exercise of its police power, the Legislature enacts a law which authorizes arbitrary individual restraint over ordinary articles of commerce and trade, including all necessities of life, is not such statute detrimental to the public welfare, and therefore, outside and beyond the power of the Legislature to enact?
3. Is Chapter 541, F.S.A., and more particularly Sections 541.03 and 541.07 violative of and repugnant to Sections 1 and 12 of the Declaration of Rights of the Constitution of Florida?
4. Is Chapter 541, F.S.A., and more particularly Sections 541.03 and 541.07, violative of and repugnant to Section 1, Article III, of the Constitution of Florida?
5. Is the "non-signer clause" provided for by Section 541.07, F.S.A., violative of and repugnant to the Miller-Tydings Amendment to the Federal Sherman Anti-Trust Act?
6. Is the Florida Fair Trade Act in violation of the Miller-Tydings Amendment to the Federal Sherman Anti-Trust Act relating to contracts between wholesalers and retailers?
7. Are the instruments attached to the bill of complaint and referred to as `contracts' sufficient to support plaintiff's cause of action?
Attached to the bill of complaint and made a part thereof is a contract dated September 6, 1947, and signed by the Continental Distilling Corporation, called the "owner", and Avondale Liquor Wine Store, called the "retailer". One of the provisions thereof is that the contract "shall continue in full force and effect until terminated by either party after notice * * *, the retailer agrees not to sell or offer for sale in the State of Florida any beverages which bear, or the labels or containers of which bear, any trade-mark, brand name, insignia or the name of the said Continental Distilling Corporation, at other than the resale prices thereof to the consumers in Florida or at any other than the terms and conditions of such resales, from time to time designated by the owner, the owner shall have the right at all times, and from time to time revise or change any and all such retail prices, and terms and condition of such resale, any such revision or change to become effective on such date as shall be specified by owner * * *." A price list of the plaintiff's whiskeys as agreed to by the parties is attached to the bill of complaint. A second contract of similar import signed by the plaintiff as owner and Barron's Bar of 382 Park Street, Jacksonville, Florida, as the retailer with price list attached is attached to and made a part of the bill of complaint.
It is contended under questions 1 and 2 supra that Florida's "fair trade law" cannot be sustained under the police power of the Florida Constitution. It is fundamental in statutory construction that the intent of the Legislature is to be found in the language of the Act and the intention sustained if found to be with the constitutional limitations, as courts have no power to legislate. Curry v. Lehman, 55 Fla. 847, 47 So. 18. The police power of a State embraces regulations designed to promote the public convenience or general prosperity or the public welfare. Atlantic Coast Line R. Co. v. Coachman, 59 Fla. 130, 52 So. 377, 20 Ann.Cas. 1047. It is argued that under the terms of the Act arbitrary power is granted to fix the minimum resale price "on all necessities of life". The answer to the contention is found in Section 541.03, F.S.A., and is viz.: "No contract relating to the sale or resale of a commodity which bears, or the label or container of which bears, the trade-mark, brand, or name of the producer or distributor of such commodity and which commodity is in free and open competition with commodities of the same general class produced and distributed by others". It is to be observed that contracts are restricted to brands and trade-marked products then in free and open competition with similar products.
Whether a particular Act enacted under the police power for the purpose of regulating a business, trade or profession is valid depends on whether or not the legislation is addressed to a legitimate end. If the measure of regulation attempted to be undertaken is reasonable and appropriate to a legitimate end for the protection of a basic industry of society and is not a subterfuge in the form of law designed to bring about some unjust advantage to particular individuals to the prejudice of the general rights of others in the same calling similarly situated, the courts have no authority to declare the regulation prescribed invalid, although they may strongly disapprove of the wisdom or policy of the measure adopted or may deem the regulation prescribed foolish or unwise. State ex rel. Municipal Bond Investment Co. v. Knott, 114 Fla. 120, 154 So. 143.
The economic interest of a state may justify the exercise of its continuing and dominant protective police power for the promotion of the general welfare, notwithstanding interference with lawful callings and even contracts. See State ex rel. Municipal Bond Investment Co. v. Knott, supra. It is generally recognized that the police power is an inherent attribute of sovereignty and exists without any reservation in the Constitution, being founded on the duty of the state to protect its citizens and provide for the safety and good of society. Laws enacted under the police power of a sovereign state for the purpose of regulation may in some instances be harsh and oppressive without contravening constitutional limitations. The police power is no longer limited to measures designed to protect life, safety, health and the morals of the citizens, but extends to measures designed to promote the public convenience and general prosperity and includes economic measures regulating competition. Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, 89 A.L.R. 1469.
Under questions 1 and 2 of petitioners' brief arguments are presented on certain facts set out in the answer of Webb's City, Inc., and the contention is made that the terms and provisions of the Act are arbitrary and unreasonable and have no reasonable relation to the public safety, welfare, morals or health of the people of the sovereign State of Florida and the Legislature was without constitutional authority to enact the "fair trade" act. Counsel for respondent filed a motion to strike from petitioners' brief certain facts so set out in the answer and which were not considered by the court below at the time the challenged order was entered. This Court entered its order of denial prior to hearing oral arguments on the merits. It now appears by the record that the Chancellor below heard the cause and made its order on the respective motions to dismiss filed by Liquor Stores, Inc., and Webb's City, Inc., and the facts so set out were not considered. We fail to find merit in this assignment.
The next contention is that Sections 541.01 to 541.08, inclusive, supra, and particularly Sections 541.03 and 541.07 are in conflict with and in derogation of Sections 1 and 12 of the Declaration of Rights of the Constitution of Florida and each thereof is repugnant to and in violation of Section 1 of Article III of the Constitution of Florida.
Section 1 of the Declaration of Rights is viz.: "Section 1. Personal rights. All men are equal before the law, and have certain inalienable rights, among which are those of enjoying and defending life and liberty, acquiring, possessing and protecting property, and pursuing happiness and obtaining safety."
Section 12 of the Declaration of Rights is viz.: "Section 12. Double jeopardy; compelling testimony; due process of law; eminent domain. No person shall be subject to be twice put in jeopardy for the same offence, nor compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken without just compensation."
Section 1 of Article III of the Constitution is viz.: "Section 1. Houses of legislature; meeting place. The Legislative authority of this State shall be vested in a Senate and a House of Representatives, which shall be designated. The Legislature of the State of Florida and the sessions thereof shall be held at the seat of government of the State."
Arguments, in part, offered in support of this assignment are: (1) it deprives the retailers of the right to fix the prices of their commodities to the purchasing public; (2) the consuming public, by the terms of the Act, is deprived of the right to purchase the necessities at the lowest possible price; (3) the Act compels the purchasing public to pay prices fixed by the producer or manufacturer; (4) the Act authorizes arbitrary price levels fixed by the producer or manufacturer and in so doing confers legislative functions and destroys free and open competition; (5) minimum resale prices on articles are fixed without regard to cost or reasonableness and without any hearing; (6) the owner of labeled or branded articles may enter into a contract with a Florida retailer for the sale of the article at a fixed price and the contract becomes binding on all other retailers in Florida of the branded articles and this power infringes on the liberty of contract; (7) individual initiative is destroyed — approval is given to the lazy and unprogressive retailer — while the thrifty, alert and progressive retailer is penalized and the general public is deprived of cheaper prices and not benefitted; (8) Section 541.07, F.S.A., authorizes a unilateral contract and the terms thereof made binding on all non-signers retailing the branded or trade-marked articles; (9) the provisions of the Act binding the non-signing retailer is unconstitutional; (10) the producer or manufacturer of trade-marked articles by the Act is permitted to determine what is in open and free competition, to the public detriment; (11) the Act grants to the producer of such articles delegated authority to fix the retail price thereof; (12) it is a price-fixing Act and not a "fair trade" Act; (13) it is not in the interest of the public to fix the retail prices on branded articles but promotes the interest of the producer and manufacturer; (14) the Act is void because it fails to provide for a notice and hearing prior to fixing the retail price on the trade-marked article; (15) the Act discriminates between the retail signer of the retail contract and the non-signer, who is bound thereby under the terms of the Act. Authorities are cited to sustain many of the arguments supra.
It will be observed that the Act limits contracts to the sale or resale of commodities which bear, or the label or container of which bear trade-marks, brands or the name of producer or distributor of such commodities, which commodities are in free and open competition with commodities of the same general class produced and distributed by others. These contracts are authorized only between the producer or wholesaler and the retailer, provided the commodity is found in free and open competition with other commodities of the same general class. The Act provides for vertical contracts only, as distinguished from horizontal ones, and competition in this manner is continuously maintained among the producers or wholesalers. Contracts cannot under the Act be lawfully made between producers of trade-marked articles.
Our study discloses that all the States of the Union, since 1931, have adopted "fair trade acts", except the States of Vermont, Texas and Missouri. The courts of last resort of some fifteen States have sustained the respective Acts. Various questions were presented and argued before the courts of last resort where the respective Acts have been considered. It is difficult for us to close our eyes to rulings of courts of other jurisdictions when considering the merits of the arguments presented in the case at bar. The economic philosophy motivating the Florida Legislature in the enactment of the challenged Act is fully sustained as being within the police power of a sovereign state. Courts are not permitted to strike down a statute because it fails to square with their individual social or economic philosophies or theories, neither can we consider the question of public policy, wisdom or lack of wisdom or other motives which may address themselves to the legislative department of our government. The philosophy or predilection of Judges as to what the law should be in such instances is nothing more than an idle gesture.
The able arguments presented by counsel for petitioners in support of the unconstitutionality of the Act are fully answered by the following authorities: Seagram-Distillers Corp. v. Old Dearborn Distilling Co., 363 Ill. 610, 2 N.E.2d 940; Joseph Triner Corp. v. McNeil, 363 Ill. 559, 2 N.E.2d 929, 104 A.L.R. 1435; Max Factor Co. v. Kunsman, 5 Cal.2d 446, 55 P.2d 177; Ely Lilly Co. v. Saunders, 216 N.C. 163, 4 S.E.2d 528, 125 A.L.R. 1308, and Annotations on pages 1335 to 1367; Goldsmith etc. v. Mead Johnson Co., 176 Md. 682, 7 A.2d 176, 125 A.L.R. 1339; Johnson Johnson v. Weissbard Bros., 121 N.J. Eq. 585, 191 A. 873; Bourjois Sales Corp. v. Dorfman, 273 N.Y. 167, 77 N.E.2d 30, 110 A.L.R. 1411; Pro-Phy-Lac-Tic Brush Co. v. Vidgoff, Oregon Circuit Ct. for the County of Multnomah, Oct. 19, 1939; Weco Products Co. v. Reed Drug Co., 225 Wis. 474, 274 N.W. 426; Sears v. Western Thrift Stores of Olympia, Inc., 10 Wn.2d 372, 116 P.2d 756; Fisher, Inc. v. Canfield, Colorado Dist. Ct. for the City County of Denver, No. A28837, Div. 2; Gray, Ltd., v. Johnson Wholesale Perfume Co., Inc., D.C., 45 F. Supp. 744; Miles Laboratories, Inc. v. Seignious, 30 F. Supp. 549; Miles Laboratories, Inc., v. Owl Drug Co., 67 S.D. 523, 295 N.W. 292; and Pepsodent Co. v. Krauss Co., 200 La. 959, 9 So.2d 303; 52 Am.Jur. pp. 643-659.
The next contention is that Florida's "fair trade law" conflicts with and is in derogation of Section 1 of the Miller-Tydings Amendment of the Sherman Anti-Trust Act. The pertinent portions thereof quoted in petitioners' brief are viz.:
"`Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal: Provided, that nothing herein contained shall render illegal, contracts or agreements prescribing minimum prices for the resale of a commodity which bears, or the label or container of which bears, the trade mark, brand or name of the producer or distributor of such commodity, and which is in free and open competition with commodities of the same general class produced or distributed by others, when contracts or agreements of that description are lawful as applied to intrastate transactions, under any statute, law, or public policy now or hereafter in effect in any State, Territory, or the District of Columbia in which such resale is to be made, or to which the commodity is to be transported for such resale, and the making of such contracts or agreements shall not be an unfair method of competition under section 5, as amended and supplemented, of the act entitled "An Act to create a Federal Trade Commission, to define its powers and duties and for other purposes" approved September 26, 1914: Provided further, That the preceding proviso shall not make lawful any contract or agreement, providing for the establishment or maintenance of minimum resale prices on any commodity herein involved, between manufacturers, or between producers, or between wholesalers, or between brokers, or between factors, or between retailers or between persons, firms, or corporations in competition with each other.'"
Arguments in support of the above contention have been weighed and considered. It was clearly the intention of Congress by the enactment of the above Amendment to remove doubts and uncertainties as to the power of a sovereign state to enact "fair trade laws" when functioning under the police power of their respective constitutions. It is in the nature of a legislative interpretation of the Sherman Anti-Trust Act. See Schill v. Remington Putnam Book Co., 179 Md. 83, 17 A.2d 175, 22 A.2d 128. Pepsodent Co. v. Krauss and Ely Lilly Co. v. Saunders, supra.
The seventh question posed here by petitioners' counsel is viz.: "Are the instruments attached to the bill of complaint and referred to as `contacts' sufficient to support plaintiff's cause of action?" After hearing arguments on the motions to dismiss addressed to the bill of complaint, it was the view of the Chancellor that the contracts, by appropriate allegations made a part of the bill, were prima facie sufficient on the then state of the pleadings. Emphasis, during the course of the oral arguments here, was placed on the illegality of the contracts because of the lack of a sufficient showing on both (a) lawful consideration, and (b) mutuality. The door on these two points was not forever closed against the petitioners by the entry of the challenged order. It is generally recognized under our system of government that the use of property and contractual agreements are usually matters of private concern, but the liberty of contract guaranteed by the Constitution is freedom from arbitrary restraints, and not immunity from reasonable regulation to safeguard the public interest by a sovereign state when legislating under its police power. Miller v. Wilson, 236 U.S. 373, 35 S.Ct. 242, 59 L.Ed. 628, L.R.A. 1915F, 829.
I would deny the petition for a writ of interlocutory certiorari.