*1 183 nar- that we necessary not make purpose does to the lawsuit for the limited party fault of the relative determining appellants’— his—and thus application row the our fault. have retreated from relative We The relative fault in this case. concept v. Pacific Railroad holding Missouri is no le- which there against [appellants] Co., 466 & Kales 566 Whitehead S.W.2d still be deter- should gal judgment bar to (Mo. 1978), day it virtually banc from the relative concept of pure mined. ... [A] Car was announced. See Parks v. Union right that the of a claimant requires fault (Mo. 1980); Corp., bide 602 188 banc S.W.2d be deter- from one tort-feasor to recover v. ex of America State rel. Victaulic Co. finding jury’s with a mined in accordance (Mo. 1979); 588 494 banc Meyers, S.W.2d of fault as respective percentages Division, Circuitry ex rel. Advanced State all tort-feasors. between Powell, Inc. v. 588 S.W.2d Systems, Litton (Don- 492 at Heights, 588 S.W.2d Maryland (Mo. 1979); Maryland 493 ex rel. banc State holding our J., Given nelly, dissenting). Contractors, Inc. v. Fer Heights Concrete only Tarrasch, result would lead any other riss, (Mo. 1979). 489 banc To 588 S.W.2d the courts uncertainty to more both step another backward. day’s decision but court’s The trial attorneys of this state. princi recognized Whitehead & Kales case re- reversed and the order should be ple fairness that “one tortfeasor is ulti consistent proceedings for further manded mately only liable for the amount of dam apportionment requiring with the rule Parks, at ages that he caused.” 602 S.W.2d degree in direct relation liability (Welliver, J., dissenting). princi That fault. ple more mere service. lip deserves than against The refusal to allow an action
minor father “for the respondent’s purpose comparing fault is inconsistent with [his] general principles announced in White Strobel,
head and Kales.” Steinman v. 293, 295 (Mo. (Welliv 1979)
S.W.2d n.3 banc
er, J., concurring). proportion respon- “The of the [minor MISSOURI, OF FLEMING FOODS injury that was caused
dent’s] [fa- INC., Respondent, negligence should be determined ther’s] v. the jury, judgment so that entered against [appellants] only will reflect Director, RUNYAN, De John G. for which portion damages [they Agriculture, partment and Missouri Parks, responsible.” S.W.2d are] Appellants. Department Agriculture, J., (Welliver, 201-02 This dissenting). com- No. ports we with requirement made rel. respect to releases State ex Tarrasch Missouri, Supreme Court Crow, 1981). (Mo. v. banc Banc. En plaintiff’s We held in Tarrasch that 8, 1982. June prevent release did not of one defendant contri- seeking the second defendant from
bution from the first. Id. at 935. protected
release the first defendant
further but the second was forced liability, pay only proportionate his share principle at 937. The of fair-
damages. Id.
ness Whitehead & Kales de- underlying the same result in this case. Paren-
mands damages suit immunity
tal bars a father,
against the but that
184 Gen., Ashcroft, Sill, Atty.
John Gerald M. Gen., Asst. Atty. Kelly, Wm. Clark Jeffer- appellants. son City, for Robertson, Joplin, Malcolm L. for respon- dent.
RENDLEN, Judge. Missouri, Respondent, Fleming Foods [Fleming] Inc. applied to the Director of the Department Agriculture [Di- distributor, for license as a milk rector] pursuant provisions 416.410 to §§ 416.560, Following an 1969. eviden- RSMo Director, tiary hearing the on his findings law, of fact and conclusions of entered an order denying application. sought judicial provided review as in 536.100, RSMo 19691 on November § 26,1979, the Circuit Jasper County Court of order, holding reversed the Director’s “that Agriculture finding Director was supported by competent not and sub- upon stantial record evidence the whole is unauthorized the law” and ordered the judgment license From issued. sought Director review in the Missouri District, Court of Appeals, Southern following the recommendation that court and is cause was transferred here decid- ed as though original appeal. Mo.Const. Y, Art. 10. § In cases of this nature “we review findings decisions of [Director] court.” Muel judgment of the trial 466, (Mo.App. ler v. Ruddy, denied, -U.S. -, 1981), cert. S.Ct. 600, 590, scope of our L.Ed.2d Authority judicial appeal 1. in review such cases is mits the manner “in the 416.490.4, per- procedure found of Missouri.” RSMo law § administrative of milk in Missouri. and distribution review is limited January, We are to determine in the first instance report detailed Committee’s findings supported by the Director’s were Assembly, General 1959 to the Seventieth competent and substantial evidence on the of the Joint Commit- Report entitled “Final whole, Prop Stephen Stephen record as a & Distributors”, led on Milk Producers tee erties, Commission, 499 Inc. v. Tax State report, the “Act”. That adoption *3 798, (Mo.1973), while not S.W.2d 802 and (as quoted that: pertinent part, pointed out deci by body’s bound the administrative 741) in Borden law, questions sions on of Wolf v. Missouri gen- in more is no article of food “There Boys, for 517 S.W.2d Training State School milk; impurity none whose eral use than 138, (Mo. 1974), give 142 we due banc quickly, more and unwholesomeness weight expertise experience of seriously affect and more widely, more and its to observe agency opportunity regu- it. The health of those who use the witnesses. duty imperative sale is an lation of its requires Resolution of the issues construc- * * recognized. universally has been 416.440, 1969, tion a section of of RSMo twenty-seven 1933 and 1936 Between Milk Practices Act of Unfair Sales [Act] legisla- price milk control adopted states 416.560, 1959 now codified as 416.410 to §§ committee, however, sub- tion.” The 1978.2 We are called on to RSMo ascertain regulation pat- sales bill mitted a milk intent, legislative City of Willow “Dairy Act. terned after the Tennessee Librarian, v. Missouri Springs State Tennessee,” Chapter of the Law State 441, (Mo.1980), doing, S.W.2d and so 3, to 52.341. The committee’s Secs. 52.331 in find assistance earlier decisions of this existing the situation finding as to Thomason, Company Court. In Borden v. was as follows: (Mo. 1962), in the banc as the committee “Testimony by received bar, case at evidence was introduced3 of a situation revealed the seriousness pursuant show that Concurrent Senate only too evident which has been Sixty-Ninth Resolution No. 19 of the Gener- supermarkets stores and corner al Assembly, ap- an interim committee was months. A during past of our state pointed with Spradling, Senator Albert M. price wars has Jr., series of destructive Cape study as Girardeau Chairman our those of problem production, processing, frightened sale and demoralized donation, jointly, space provides: used free merchan- 2.Section dise, space by for stor- shall, used retailer rent on processor 1. No milk or distributor processor’s displaying or dis- unfairly the milk or with the intent or with effect merchandise, aid, diverting competitor, financial thing free tributor’s trade from a or of oth- value; destroying injuring competitor, equipment, any ex- erwise competition, other or of or creating give monopoly, cooperative cept receipt or fide from a the bona any purchaser give product or offer any advertising milk patronage refund based on association of a rebate, discount, services, free service or purchaser patronage with the co- allowance, pay advertising for operative association. donation, space dise, jointly, merchan- used free any thing acceptance 4. Proof of the space rent on used the retailer prima product purchaser by any milk value storing displaying processor’s or the milk or of this section. of the violation facie evidence aid, merchandise, free distributor’s equipment, cept financial proc- prevent a section does not 5. This value; any thing of ex- or furnishing point-of- or distributor from essor cooperative the bona fide return advertising a retailer without material to sale cost for the patronage association to its members on a promotion of the sale products savings basis of the realized on sold products. processor’s or distributor’s patrons. or and distributed to the members prevent a dis- section does not 6. This give 2. Proof of the or offer payment percent less for count or before a certain two anything prima of value is facie evidence of a date. violation of this section. product purchaser accept 3. No milk shall Report 3.Fleming’s “Final No. 1 is the Exhibit any any processor milk or distributor Producers and on Milk the Joint Committee of Distributors” of services, rebate, discount, free service or January, allowance, advertising advertising pay for citizens fully implica- who understand the sary difficult.” The police power tions of such activities as well those extends to economic needs. (Emphasis who depend their upon livelihood added). industry. milk Milk has sold for as little and further stated at 744: as eight per cents half gallon some Clearly greater governmental there is a town, areas. In one price in promoting insuring interest fair other dairy products dropped low that so competition in industry the milk by pro- the farmers were able to them hibiting sales below cost in that industry to feed to pigs. their industries, than in other which fact course, prices “Of such as these are legislative accounts for the attempt often greeted with enthusiasm infla- remedy competition unfair avoid the consumers, tion-weary but the natural danger of monopoly industry. On consequences thereof bode future diffi- the facts found interim by the committee producers, culties for distributors *4 Legislature the properly single could out consumers alike. Price exert wars tre- the milk industry for a valid exercise of pressure mendous on smaller distributors police the power of the State to remedy who are without the operate resources to conditions found to in that industry. exist periods extended of time when loss (Emphasis added). is on incurred each price sale. The Before with proceeding respon further much of milk purchased produc- the from dent’s regarding contentions the validity ers in is established under a fed- Act, say of the we that it appar should is eral order. Thus the distributor finds ent the face of the that in passing Act himself trapped between contracting the Legislature purporting it the was to act pincers price of the stable of the he police under the of the power State and buys ever price lower the milk the prevent Act is designed mo he sells. Under such small conditions dis- nopolies and practices unfair trade disappear tributors large distributors competitors public good. for the “The expand competition longer until no con- wisdom, propriety, expediency of leg trols prices and the buyer is left to the islation enacted in pursuance police mercy of the seller.” (Emphasis added). is power a matter for the exclusively The Court in Borden at continued 743: Legislature.” Auto Square Supply Star dairy “that the industry subject reg- 968, Gerk, 997, v.Co. 325 Mo. 30 S.W.2d ulation regulated and has been so by the 447, 462[14-16]. legislature public welfare for Summing up general purposes legis- the many years.” In the case of State of controlling lation the fluid milk industry Co., Kansas ex rel. Fleming Anderson v. which includes both health economic 674, 12, 184 Kan. 339 P.2d court the said concerns, 745, citing this at Court in Borden the dairy industry had regulated been York, v. of New People Nebbia State the purpose public protecting the 502, 516, 505, U.S. S.Ct. L.Ed. 940 health and welfare more completely than legislature concluded (1934), that when any other industry. sphere within its decides that conditions In the case of H. P. v. Hood & Sons in an make unrestrict- practices industry DuMond, 525, 657, 660, 336 U.S. 69 S.Ct. competition inadequate safeguard ed an L.Ed. the court said: “Production public consumers’ interest and a need has and distribution of milk intimately are so appropriate stat- been demonstrated related to health public and welfare that threatened conse- passed utes to correct the regulation need for those protect be enforced and quences, such statute will long is, recognized interests has been regulation though set aside fixes from be hardly a constitutional standpoint, Legislature to Also, prices if “deemed be economy controversial. industry those and to industry engaged is so eccentric that economic fair to especial- controls been this is consuming have found at once neces- And public. where, here, agreement respondent’s parent so plan the economic malad- ly is one of which justment price, Foods, Co., threatens Topeka, company, Fleming one producer harm at end agreements of those By Kansas. the terms at series the consumer the other.” Id. to services provided each retailer is entitled 745. Rejecting at constitutional various comput- of which is respondent, the cost challenges to the court Act the in Borden keyed percentage under a fee schedule ed held: during a four- purchases respondent from
There is no ground valid for a strict con- a retail- accounting period. Although week against struction of the Act the State services, he still must pay er refuse all this proceeding and think it must be we his service fee based on a volume discount given a liberal construction in order that ranges percent, from 4 the retail- purposes may its beneficial be subserved. purchases Fleming from are less than er’s (1. 753) c. $5,000 during period, to 2.15 four-week adding $100,000. reach page percent, purchases if such 755:
The Missouri statute contains no criminal Fleming called as witnesses several of its penalties statute, and is not criminal IGA franchise retailers who conceded that and is not required strictly be con- wholesale approximately gro- 90% of their against strued the State. ceries came from and while not In this regard worthy it is of note that compelled franchisor, Fleming, during testimony expert of its emphasized potential competitor each that a Devino, witness Dr. Gary introduced as its Fleming would to offer services at have *5 Exhibit No. 31 an article Devino authored than those of Flem- equal least to or better wherein he view expressed legis- his ing for taking him to consider his business lative intent when adopting the Unfair Milk elsewhere. Practices Sales Act as follows: by Other services not covered fee The concern on of part legislature the the arrangement accounting include services was that a price continuation the wars ranging from to ordinary bookkeeping the would result in a disappearance of small statements, loss preparation profit and distributors, development of mo- items. Mr. tax returns and similar Warren nopolies by large (Emphasis distributors. Lang, management a certified consultant added). officed in Kansas testified City, concerning From the language of the Act and with variety provided Fleming, the of services insights these legislative to the intent we the services explaining many would have examined the to record determine if competing not be available retailers in to findings the and conclusions the Director rural areas because the cost those serv- were supported by competent substantial provided if prohibitive ices would be evidence and law. authorized firm with private no tie-in groceries, certainly most the cost of and Fleming Missouri, Inc., Foods of respon- would ex- such services to the franchisee herein, dent is a food wholesale distributor paid by ceed those the retailer under the and franchisor of retail grocery IGA stores addition, In agreement. sales-service Missouri, a 16 county area of southwest spread fees are management consultant portions the northwest and northeast high those with among the retailers and Arkansas and respectively, Oklahoma and a a service fee sufficient to pay volumes part of southeast Kansas. It distributes Flem- provided by the cost of services cover groceries wholesale supplies only and to obtain such serv- ing while smaller retailers IGA retailers who have entered into a substantially lower than that ices at a cost agreement trademark license with respon- consulting management dent. There are 96 retail franchisees available such testimony was that the area, expert in the four market. The state of whom are services, grocers. equipment Missouri retail for provision Each the fran- scheme chisee-grocers constitute a com- enters into sales-service and other of value
pelling made, incentive equipment, retailers contin- each call we phone ue their business with the franchisor vis-a- that. We all don’t break it down that fine, vis a competing distributor gives added). Flem- no. (Emphasis ing a competitive decided edge. testified, equipment As Moore was pur- by Fleming Fleming, chased and billed to Fleming indulges practices provid- other then, “we rebill it to turn around and ing a strong influencing basis for its fran- pays the customer and customer us.” First, Fleming chisees. has loans Two the franchise-retailers who testified to several of its Missouri franchise retailers Fleming’s witnesses behalf stated who, case, in each sought had commercial were able they equipment through to obtain loans but failed had in those Flem- efforts. price at a than much lower had ing attempting arrange assisted in fi- shopped they equipment on their nancing charged no fee for this service. own. Thereafter, Fleming made direct loans to a
number of enabling these franchisees them Moore described another service to fran- to acquire inventory equipment. While plan- chisees available “our store through Fleming’s President expressed reluctance to department”. ning explained He how this making loans, such this practice extended department provides extensive services to not only to Missouri franchisees but those in retailers one of which had In states. at least one instance Flem- our man ... for six up tied months. If money lent directly to grocer who you take all of time his total involved in was “in wholesaler”, business with another rigmarole the store design, you go all the receiving and on Fleming’s loan, grocer through people, getting with insurance left “joined the “other wholesaler” and design the building architects to IGA” with whom he is still associated. specifications meet that we recom- retailers, mend for getting equip- addition the loans and financial people ment equip- install darned assistance, respondent purchases freezers, ment the way supposed be install- coolers and other grocery store little, ed make operating. very We for the benefit of its franchised retailers. any, money.” (Emphasis added). Under this an scheme order is placed by the *6 Emphasizing that (franchisee) retailer this service had indeed who, with respondent franchisees, using benefited the Moore added that its parent company, Fleming Foods at year’s department end if the “made a Co. of Topeka, prospects purchases for and dollar, we’re lucky”. equipment bargains shipped are to the retailer on the basis respondent’s of cost addition, has in a number of Fleming plus 10%. There was some conflict buildings instances leased store to testimony profitability of this above its own rent (charging sublease 5% equipment operation and Richard Mr. cost) available fran- properties made the Moore, Fleming’s president, testified that retailers, of chise who because insufficient while pro- the over-all resources had been to obtain a unable suit- gram profit, showed a small possible it was able location for on their own. It is leasing that some equipment might have been sold clear that are Fleming’s obligated assets to a at less Fleming’s “given”, franchisee than cost. as that term is used in the statute, The following portion of testimony his is benefit of its franchisees as pertinent: require Fleming the leases in evidence “rents primarily pay remain liable due
Q. charge, though, particu- 10% all ...” of the perform the covenants in, may lar not retailer be tied though assigned are premises lease reflect outlay money the actual of sublet. made, you have though, attempting in
get him equipment; his is that correct? management Lang, Witness the certified cost, consultant, A. it doesn’t cover our Probably opined variety that the of serv- keep piece marketing but we on of relationship don’t track each of ices and the close provided ninety-six and its retailers incen- retailers in the four state an tive for the retail grocer continue area.
business with the opposed franchisor as retailer enters into a sales- 2. Each IGA other distributors of milk and this relation- compa- plan applicant’s parent service ship gave Fleming a decided competitive Topeka, of ny, Fleming Company Foods advantage. Kansas. To better importance understand the the sales-ser- provisions 3. Under the this we respondent’s conclusion examine each retailer be- plan agreement, vice IGA present mode of operation. Though Flem- certain comes entitled to services ing has not obtained the necessary license which, the cost of with certain by applicant, products distribution milk and milk in to a exceptions, computed by is reference franchisees, Missouri for its Missouri Flem- service fees based establishing fee schedule ing places milk orders with Dairy Fairmont applicant from purchases each retailer’s products the milk are shipped directly period. The ser- during given four-week from Billing Fairmont to the retailer. reflects, vice charged by applicant fee accomplished by Fleming rather than Fair- applicant pro- the cost to aggregate, mont to the individual retailer and the milk retailers, its franchised viding services to received retailer is labeled Fair- personnel warehouse and over- applicant’s private mont under a IGA label. Some cases, degree head in some a certain plus, strongest evidence in support Lang’s profit. exceptions Two to the inclusion of opinion corresponding conclusion of are the cost of services in the fee schedule the administrative agency, com- “[t]his providing bookkeeping account- petitive advantage would into carry over fee and the ing services for an additional the sale of milk products,” with the effect supplying advertising mats at a cost of of unfairly diverting trade to the harm of each.' $6.50 competitors, cáme grocers from three Among provided by ap- the services (called by respondent) each of pur- whom plicant following: to its franchisees are the chase approximately 90% of their grocery products from Fleming. They (a) (1) testified that assistance. It is the Financial (distributed IGA labeled milk by Fair- to assist some of its practice applicant Fleming’s mont on purchase orders) enjoyed seeking franchised retailers in commercial position first dairy their cases and loans. When such loans cannot be obtained occupied space source, ranging applicant from 65%to 80% of be- any commercial space the entire lendor, in the cabinets. this issuing fully On comes the secured loans record the Director made these findings at an interest rate somewhat above the fact and conclusions of law: in New York “prime quoted by rate” banks *7 City. charged The franchised retailer is not OF FACT
FINDINGS a appli- fee either for services rendered initiation The Director finds the cant as a loan broker or for the following facts: issued processing actually and of loans 1.Applicant corporation a Missouri applicant. engaged distribution, in wholesale food sup- ply franchising of grocery (2) hearing applicant’s IGA retail Prior to the on license, stores in a a several loans of sixteen-county application area southwest Missouri, the Missouri and portion provided northwest of Arkan- this sort had been sas, Oklahoma, portion provide the northeast intention to such applicant’s and it is portion moneys the southeast have Applicant Kansas. service in the future. Loan groceries purchases, distributes wholesale inven- supplies equipment been used for solely to of a retail- aspects IGA retailers who have entered and other tory purchases into a a agreement trademark license with er’s In at least one instance business. applicant. Applicant retailer approxi- provided prevent distributes to loan was mately twenty-three bankrupt. retailers in Missouri from going
(b) Equipment Sales to label milk occupies position Franchised Re- first in the (1) tailers. Applicant assists retailers in the franchised retailer’s dairy case and fre- purchase of grocery equipment quently up store such takes the greatest percentage of freezers, all Applicant, coolers and the like. milk located therein. using parent its company, Fleming Foods of Although applicant’s 7. re- franchised Topeka, Kansas, attempts pur- to locate and tailers are not compelled whole- chase equipment such is in turn groceries sale from applicant, the various retailers, shipped directly to the franchised by applicant provide services offered being charged franchised retailer appli- strong incentive for its retailers to continue cant’s costs plus percent. ten participation program. the sales-service (2) Although applicant’s equipment pur- Many provided by ap- 8. of the services chase program profit, shows a small in some plicant would not be available to competing specific instances, the ten percent profit retailers in rural areas because the cost of margin does applicant’s not cover costs in providing prohibi- those services would be securing equipment. tive to such competing pro- retailers. viding of such consult- by private services
(3) In some cases a franchised retailer ing firm or have to be at other source would was able to through ap- obtain a cost greater paid by much than that plicant at a much lower price than could applicant under its franchised retailers otherwise be open obtained on the market. plan agreement service-sales and service fee (c) (1) Applicant Other Services. pro- retailers with Although schedule. some vides certain services in the nature of sub- high volume service fees suf- purchases pay leasing of grocery buildings store and prop- provid- ficient services to cover the costs of erty to its franchised Applicant retailers. ed by applicant, smaller retailers would es- charges a retailer an equal amount to its sentially be services at a cost sub- provided own plus percent. rent five Applicant only stantially lower than that found leases property purpose of sublet- management consulting market because of ting it to its retailers if the retailer does not Additionally, lower volume sales. account have sufficient assets capital to obtain ing provided by applicant services an such lease in right. its own charge additional over and above the fee (2) Applicant provided one of its fran- agreement for the service would plan sales chised promotional retailers a allowance so be much services were costly more such competition retailer could meet found market. acquired open from other retailers in its market area by ap- 9. The various services which would constitute a violation of Chap- including retailers plicant to franchised ter regulations RSMo and issued there- assistance, granting of financial under. brokerage purchasing as- providing Many appli- franchised retailers of store acquisition sistance in the cant purchase approximately ninety percent real estate equipment, providing leas- of their groceries applicant. wholesale services, accounting providing 6. Applicant cost, fills its milk currently providing low services at milk product needs to a certain extent allow- promotional services such as utilizing the services of Fairmont Foods of ances constitutes the City, Kansas Missouri. Fairmont Foods is a retail- by applicant value to its franchised *8 licensed processor and distributor of Although appearances milk ers. there are products. and milk Orders for such items giving ongo- of such services is the result placed transactions, are with applicant which are for- the various ing arms-length warded to Fairmont. Fairmont distributes services not be but for the would the applicant’s private milk the fran- directly label franchise But for agreements. applicant’s franchised retailers and bills services would be ap- agreement, chise plicant cases, directly. only at many private this available to the franchised retailers greater many cost and in value” as “things contemplated by cases such services Sec- 416.440.1, would not RSMo and issued regulations be available under circum- tion Further, thereunder. stances. such services available
to competitors not having availability giving granting 6. The services a franchise agreement such as offered and of value as describ- things by applicant by applicant could avail of such themselves ed in these and Conclu- Findings of Fact services cost only at cost to exceeding the gives sions of Law to its franchised retailers the franchised retailers. competi- said franchised retailers a decided advantage
tive in the franchised retailer’s same marketing areas because the services OF CONCLUSIONS LAW are are available generally available or The Director makes the conclu- following cost, only competitors at of said greater sions of law: competitive retailers. This ad- franchised 1. If applicant’s application for license is the sale of vantage carry would over into granted, be a would “distributor” within milk of which re- products, distribution the meaning 416.410(7), of Section RSMo quires applicant the license for which has and 2 40-3.010(5) C.S.R. and thus would Therefore, applied. giving grant- and have comply provisions with the Chap- ing services of value such and regulations ter RSMo and there- issued unfairly diverting would have effect of under. competitors trade in the field of milk resulting injury 2. The and milk sales system whereby product acts as applicant competition such competitors, destruction of loan for the obtaining broker of commer- tendency monopoly and a to create a favor- cial loans and as a lendor of last resort retailers. applicant’s franchised without charging any fee for such broker- age and loan services constitutes “financial de- carrying 7. The on of the activities aid” phrase 416.440, as the is used in Section through 8 of the paragraphs lineated in RSMo. Fact, herein, paragraphs 1 Findings of and of Law would through 5 Conclusions 3. system The and whereby applicant its constitute violations of the Missouri Unfair parent company purchases and resells Law, 416.410- Milk Practices Sections Sales equipment on behalf of and to applicant’s 416.560, regulations issued there- RSMo franchised giving retailers constitutes the applicant under for the fact does but of a “thing of value” as contemplated by fluid currently not in fact distribute milk or Section equip- RSMo. The items of milk products fluid to its franchised retail- ment purchased so constitute ers in Missouri. contemplated by 40-3.010(13). C.S.R. 8. issuance of a to distribute The license 4. system leases whereby applicant in Mis- products fluid milk fluid milk and thereafter subleases store grocery provisions souri in accord premises specific for the benefit fran- of its Law, Milk Missouri Unfair Sales Practices chised retailers which would be otherwise regulations is- Section 416.410-416.560 and premises unable to lease such constitutes in vio- put applicant sued thereunder would the giving “thing of a of value” as contem- said law regulations lation of plated 416.440.1, by Section and 2 granted that such license very instant 40-3.020(18). C.S.R. Therefore, cannot applicant and issued. pro- The system whereby applicant fluid hold a license distribution vides promotional allowances to allow in Missouri products fluid milk competi- franchised retailer meet local its same time continue and at the tion, whereby are accounting services which would system distribution and food provided to franchised a cost retailers at milk and distribution of fluid include the less than would otherwise be charged subject regulation by products fluid milk regulations same or is- ap- similar services outside Sections 416.410-416.560 plicant’s system constitutes sued thereunder. *9 rebates, offering give
9. The extensive evidence introduced
includes
or
discounts,
services,
applicant regarding
advertising
free
allow-
upon compe-
the effects
ance, donations,
merchandise,
for)
tition
free
(pay
of the Missouri Unfair Milk Sales
Law,
advertising space
jointly,
space
used
rent on
416.410-416.560,
Practices
Section
used
storing
display-
retailer for
or
thereunder,
regulations
RSMo and
issued
merchandise,
ing the milk distributor’s
fi-
although having
regard
merit with
aid,
equipment
nancial
free
or any thing of
policy questions
underlying said law
determining
value.
whether the record
regulations, does not address the issue of
supports the findings of the Director we
applicant’s
law and
compliance with said
is
must first decide if the proof supports the
proceeding.
therefore
irrelevant
to this
fact of
or
Fleming’s “giving
give”
offer to
policy questions
Such
are in the domain of
any “thing of value” or “financial aid” to
the Missouri
Assembly
General
to which
Second,
“any
product purchaser”.
we
said questions should be addressed.
must determine if the services or
10. All the conclusions of law implicit in
value were
or
“with the in-
given
offered
Findings
above
hereby
Fact are
unfairly
tent” or “with the effect” of
di-
made.
verting
competitor
trade from a
or other-
injuring
competitor
destroying
wise
a
or of
ORDER
See,
competition
creating monopoly.
or of
WHEREFORE,
IT IS ORDERED that
Co.,
Dairy
State ex rel. Thomason v. Adams
application
Foods,
of Fleming
Inc. of
(Mo.1964).
The extensive list of instance a practices pro- trade As in one chandise. noted was hibited to licensees enumerated in arrived at or prospective 416.440.1 retailer had transferring prod- 4. The term distributor is defined in 416.- title within the state to milk 410(7) consideration, “any person, product of the Act other than a ucts for a where the handler, engaged processing bulk milk in the business of to be sold resale or further ...”
193 verging on insolvency system and the infusion of those outside the and the “store Fleming’s money, though at an interest rate a varie- planning department” offers “prime rate”, somewhat above the ty design, most cer- of services such as store architec- tainly constituted the giving of financial aid tural in support obtaining and assistance and something of value. insurance. These too are offered on an almost no profit basis and in one instance addition, Fleming assists its fran- “tied up” Fleming’s single man for a retail- chisees in the store er for Fleming six months and from which equipment such as freezers and coolers little, “very any, money”. makes This scouting the advantageous market giving constitutes financial aid and other prices and arranging shipment direct things of value. These and the variety retailers plus for cost 10%. While this items a com- previously provide discussed equipment purchase program apparently petitive advantage obtaining Fleming profit shows a small instances, in some no keeping retailers. There can be the overall scheme the charge 10% does not question that this competitive edge would cover Fleming’s cost securing the equip- carry products, into the direct sale of milk ment. From view, point retailer’s the distribution of which requires the benefit is readily apparent from the license Fleming giving seeks. The of such testimony of grocers those who stated they things clearly services and of value is in- were able to obtain equipment through tended to and would have the effect of Fleming at a lower price than could have diverting competing trade from distributors otherwise been obtained open in the mar- in the field of milk and product milk sales. ket. Though it has been argued this activi- This broad range practices trade ty does not giving constitute “free mer- integrated system of service and sale is (another chandise” of the proscribed prac- precisely of the sort which the Unfair Milk tices of 416.440.1) (emphasis added), Sales Practices Act is to control designed nevertheless falls within prohibitions and prevent. Fleming While remains free to “financial aid” and “any other thing to continue its gro- activities in the sale of value”, and the evidence supports the Di- ceries and other products, a refusal of the rector’s findings and conclusion in this re- application justified license was gard. By the same token leasing real prop- case at ongoing system bar. This extensive erty for the purpose of providing the same of financial aid and of value is clear- franchisees, to its who are otherwise unable ly distinguishable from the three day “in- to obtain proper facilities, store is possible troductory promotion” sales countenanced only though the Fleming’s commitment of rel. State ex Thomason v. Adams Dairy assets, for it who becomes obli- Co., (Mo.1964), S.W.2d and the four gated for the payment of per- rents and day loss leader held insufficient to warrant formance of all the lease terms and that injunction issuance of an in State ex rel. obligation though continues the property is Foodliner, Inc., Davis v. Thrifty assigned or sublet to the grocer. Without (Mo.1968). In this connection the con- question the obligation franchisor’s on the clusion of the court in Davis at 291 is appro- lease is the indispensable consideration. priate stated, where it is determina- “Our Without Fleming’s presence and financial tion of this case is limited to the necessarily commitment the franchisee would other- facts and circumstances of record. Each wise be unable to obtain premises such and case must be determined on its own peculiar this arrangement constitutes the of a appropri- facts and circumstances.” That “thing of value” within the meaning of Davis ately limiting language only 416.440.1. scope describes the narrow of that decision
The same may be said for the but makes clear the Court did not intend accounting and tax consultant service fur permitting construction of statute devised; nished to the retailers at fees less than in- broad scheme of the sort here would be charged stead, for similar services to such scheme is forbidden the Act. Dairies, DONNELLY, J.,
Similarly, Foremost
Inc. v. Thoma
C.
and MORGAN and
son,
(Mo.
1964),
that the term “discount” as used in the Act senting opinion filed. was not intended to justified include cost differentials, price volume no provides au BARDGETT, J., dissents and concurs in thority overturning the Director’s deci- WELLIVER, separate dissenting opinion of sion. While those cited cases did not in- J. us, volve the issues here before the narrow scope limiting of their lan- facts SEILER, J., participating. guage in those offer sup- decisions effective WELLIVER, Judge, dissenting. port for affirming our decision here order reversing Director and I dissent. respectfully judgment of trial court. There is no the Di- It is clear from the record question that the franchisee-grocers, though Agriculture rector of never intended to is- not expressly buy only forced to from Flem- sue license milk. respondent a to distribute ing, give special advantage, or to in fact that the Although parties agree Depart- give edge such an to their and franchisor ment of the burden of Agriculture bore understandably give bearing the IGA v. Adams proof, see ex rel. Thomason State great label a and majority space of the 553, Co., (Mo.1964),it Dairy position first of their cases. dairy retail had, for all apparent is the Director one changing instance a retailer admitted before the practical purposes, determined from another Fleming distributor and would hearing that the license should unequivocally franchisees testified hearing be beginning denied. At the remarkably strong showing by would take a following opening Director made a competitor to have them break their rela- statement: tionship with their franchisor.5 It should remembered, gro- be 90% of their wholesale I would like to DIRECTOR RUNYAN: purchases cery Fleming. are from The evi- call this to order. hearing dence demonstrates that if a milk license Fleming were obtained intends to continue hearing is to deter- purpose The of this herein, hence, its trade practices discussed a milk distribu- products mine whether the Director stating was correct such Fleming tor’s refused to license should be practices put “would applicant violation Missouri, Incorporated. Foods of very said láw ... at the instant upon application Grounds granted such license is and issued.” The Missouri, Incorporation Fleming Foods of application was properly refused. [sic], license for a milk distributor’s judgment of the trial court is reversed and be are as follows: refused the cause remanded with directions that license, Fleming Foods of If issued the judgment be entered affirming the Di- comply Missouri will be unable to with rector’s denial application Fleming 416.440, Revised provisions of Section Foods, Inc., Missouri, for a license to 1969, Statutes, Missouri due to distribute products fluid milk and fluid milk financing of credit and under the Missouri the extensions Unfair Milk Sales Prac- tices Law. retail customers. provided their simply Fleming argues vertically integrated quite The answer neither Flem- that the is that supermarkets have in the area is their own warehouses and nor other wholesaler distributing groceries “private subject are their sale of their own label milk”. to the Act as to pro- practices question competitive From this the sales has been raised that if nor are their However, Flemingpractice impermissible the milk under the the terms of 416.440. hibited both the Act if act, subject practices Fleming competitors are would not similar of other and its subject they wholesalers in the area be become “distributors” likewise products of milk as that control under the Act. sale and dissemination by the statute. term is defined license, Secondly, if Arkansas, Kansas, issued a ties Fleming parts Foods Missouri would unable Respondent’s be to Oklahoma. franchisees enter comply with the provisions of Section plan into a agreement sales-service 416.440 Revised Statutes of Missouri respondent respondent under which 1969, due to this company providing provides counseling fee services on store [gjrocery and dairy equipment to their layout, location merchandising, adver- retail customers. tising special promotions, public rela- tions, expansion diversification. The Thirdly, license, if issued a fee for computed each four weeks is on the Foods of Missouri would unable be amount grocery pur- of each franchisee’s comply with Section Revised respondent during preced- chases from Statutes company since this ei- *12 period. Respondent four week pro- also provides ther or offers provide free accounting vides services for an additional services and other things of value to their range fee based the of a upon services that retail customers. addition, retailer respondent utilizes. added.) is sub- (Emphasis language The has infrequently assisted its franchisees similar the notice stantially to that used in loans, them, has obtaining money loaned respon- hearing that the Director sent them, has for property leased sublease to 7,1977, the same July virtually dent on purchase and has assisted them in the findings language subsequently became his equipment. and conclusions of law. The extend- fact ships IGA label milk Respondent hearing1 formality. ed was but an empty its own trucks to its fran- warehouse on scope of our review forth in The is set Arkansas, Kansas, Oklahoma, chisees in not, 1978.2 how- RSMo We must § license and it seeks a to do so Missouri. ever, so defer to we abdi- agency the that City, Fairmont Foods of Kansas Presently, judicial especially cate our function. This is ships a milk processor, directly IGA milk true in cases such as which the this in franchisees. respondent’s Respon- acts as much as it agency as an advocate dent that it could lower the deliv- estimates it is clear impartial does an tribunal. When price of milk ten per ered wholesale cents before agency that the has decided the case gallon if it were allowed to receive Fair- hearing conducted, ever we should the shipments mont’s milk at its warehouse and that the give not the blind deference refrigerated milk on its own distribute the opinion the Di- principal appears to accord trucks, deliver other items to Agriculture. rector of stores The Di- daily. franchised Missouri because, respondent rector a license Respondent is distribu- denied a wholesale food Joplin, concluded, of such provision tor in Missouri. It franchises and he services 1969,3 416.440(1), supplies independent IGA retail would violate RSMo in sixteen coun- stores Southwest Missouri the Unfair Milk Practices Act.4 upon procedure or (5) hearing days. unlawful Is made 1. The lasted two witnesses Ten testified, trial; into 42 exhibits were admitted without a fair testimony arbitrary, capricious pages (6) The in the or unreason- evidence. fills 388 Is transcript. able; (7) an abuse of discretion. Involves 536.140(2), provides Section part relevant that: 416.440(1) provides: 3.Section inquiry may extend to a determination shall, processor or distributor No milk agency of of whether the action of the unfairly di- effect of with the the intent or (1) provi- Is in violation of constitutional competitor, or of other- verting from a trade sions; destroying competitor, injuring or of wise statutory (2) authority Is in excess of the give creating monopoly, competition, or of jurisdiction agency; or any product purchaser give milk or offer to any (3) unsupported by competent Is and sub- services, discount, rebate, or free service record; upon stantial evidence the whole advertising allowance, pay advertising for Is, (4) any reason, unauthorized law; rent support sublease at simply percent
The record does not five more respondent would finding Director’s paid than it on the principal lease. When provides The statute violate the statute. respondent assisted its franchisees processors that milk or distributors of equipment, it charged them ten (2) unfairly effect (1) with the intent or percent more than the cost of injuring a com- or (3) diverting respondent.6 trade from Finally, charged respondent creating or destroying competition, petitor, more its accounting services than give (4) offer services give respondent. themselves cost Under monopoly purchaser anything product fran- plan agreement, milk sales-service proscribes. statute pay except chisees for all services account-
ing regardless of whether advan- they take There is tage not one line None free.7 testimony them. of the services is intent to divert injure trade from or a com- respondent’s Even if sale of franchise petitor, destroy competition, or create a considered, could some services be milk monopoly. There is not one line of serv- imagination, “giving” stretch of testimony that respondent franchisor has statute, meaning ices within the given5 anything to its franchisees opin- support principal record does not purpose creating a monopoly. Re- summary ion’s conclusion “[t]he spondent’s president testified that “[o]ur *13 is clear- such services and value company provides nothing free retail- ly to and would have the effect intended er.” There is no contrary. evidence to the competing trade from distributors diverting Respondent made direct loans to its fran- products in the field of milk and milk resort, only chisees as a last when loans not Respondent’s sales.” franchisees are from unavailable, conventional sources were re- required agreements under their and it did so only at a rate interest spondent purchase all of their greater any or than the prime established rate. respondent When are property inventory respondent. leased for sub- Neither franchisees, lease to its respondent charged they any compulsion to do so. Such under donation, space jointly, possession compensation” used free merchan- “be- or without toor dise, space upon gratuitously stow another con- rent on used the retailer for or without storing sideration,” displaying processor’s or Dictionary (5th the milk or Black’s Law merchandise, aid, distributor’s equipment, financial free 1979). ed. any thing value; or ex- “[wjhile principal opinion this cept 6. The states that cooperative the bona fide return program apparently association to patronage on members instances, profit in the savings products basis of shows a small in some on realized sold charge cover patrons. does not distributed to overall scheme the members or 10% securing equipment.” The statute Fleming’s as codified in cost of RSMo 1978 is identi- 1969, cal to contrary the one codified in uncon- RSMo is to fact. The That assertion involved in this case. testimony respondent’s president tradicted equip- any was not them that “[w]e’re 4. One would have to be ostrich an with his ment, you.... operation does I assure That recognize head in the sand to fail to that the by any profit, profit. show a Not an outlandish Act, 416.410-.560, Unfair Milk Practices §§ Certainly profit. It does show a means. 1978, although RSMo terms, antimonopoly in couched profit. stay in business shows a We wouldn’t goal has as supporting its ultimate profit.” show a we didn’t prices. milk respondent’s 7. It is irrelevant franchisees 5. This “[d]isregarding Court has noted that respondent received services from less ‘discount,’ at a cost the moment the word it will be not- they open than could have ed obtained on that the other words and clauses [in § 416.- 440(1) suggest This carry market. is not to all transac- ] of a connotation donation length discriminatory gift.” or a tions at less Dairies, made than arm’s not should Foremost Thomason, 651, greater Inc. scrutiny. v. (Mo. receive Sham S.W.2d transactions at 1964). banc discount, artificially prices may It seems clear that a low as well 416.- violate § well, gratuitous. is in a 440(1). Nothing case, strict sense We must in the record of this plain construe however, nontechnical suggests words in “their respondent’s agree- ordinary sense,” and usual ments with its franchisees were made less at 1978, “give” ownership means to “transfer length. than arm’s arrangement an result in substantial prerequisite was not a diversion of the loans that respondent has trade. Furthermore, some of its franchisees. Dairy, Adams respondent’s twenty-three franchisees place imprimatur We should not our Missouri, participate Southwest ten do not price support what amounts to an artificial program. the milk principal opinion in the Nothing requires scheme. record points out that one admitted retailer opinion result reaches. The principal switching from another distributor to re- trial court concluded that “the summarily spondent, but nothing sug- record finding Agriculture of the Director of was gests that it was to the exclusion of other supported by competent and substantial producers fact, or distributors. In one is un- upon evidence the whole record and retailer indicated that he would continue to law.” conclusion should authorized Our sell Foremost and Hiland milk well as trial judgment be the same. The IGA even if respondent were granted a court should be affirmed.
license to distribute milk. Neither respondent could destroy compe-
tition or create a if it were monopoly grant-
ed a Respondent license. operates only
sixteen Southwest Missouri counties. Just franchisees,
thirteen of its Missouri partici- pate program. in its milk Respondent occu- Missouri, Respondent, STATE of pies only 9.4% the market within its operating area. year in ques- v. tion, respondent’s fluid milk sales in South- PRIER, Appellant. Kevin west $403,000. only totaled With No. 63474. size, its small there can be little doubt that *14 respondent could neither intend nor effect Missouri, Supreme Court adverse consequences. market En Banc. Finally, nothing in the suggests record June respondent’s actions are unfair. Re- spondent is not primarily in the milk busi-
ness. The milk it would distribute were it
granted a just license would be one of sev-
eral thousand items that it distributes. Re-
spondent desires only permit its fran-
chisees compete large chain
stores and competing grocery distributors provide themselves services similar to
those that respondent sells to its fran-
chisees. The expert Director’s witness tes-
tified that “it very is a common and com-
petitive process of supplying these serv- Thus,
ices.” evidence shows only recognized
[t]he
and frequently practice used in the ...
industry, which legitimate has a business
purpose and which has never heretofore
been considered against public policy
or as by deception, characterized bad fraud,
faith and which did not in fact