Fried v. KervickFried v. Kervick
The opinion of the court was delivered by
Plaintiff Sam Fried, a retail gasoline dealer, sought a Superior Court injunction restraining the enforcement of N. J. 8. A. 56:6-2(a), (c), (d), (e), which regulates certain aspects of the retail sale of gasoline. The relief sought was predicated upon a claim that the statute is unconstitutional. The Chancery Division found otherwise and granted summary judgment for the defendant. Plaintiff’s subsequent appeal to the Appellate Division was certified on our motion prior to argument there.
N. J. 8. A.
56:6-2 (a) requires retail dealers to post certain signs on their pumps or other dispensing equipment stating the price per gallon of the gasoline sold, which price is to include all State and Federal taxes. The sign, however, must state, either the amount of the taxes included or, without specifying the amount thereof, that the taxes
“(e) No rebates, allowances, concessions or benefits sliall be given, directly or indirectly, so as to permit any person to obtain motor fuels from a retail dealer below the posted price or at a net price lower than the posted price applicable at the time of the sale.”
Plaintiff maintains that the sale of gasoline at retail is a private business, not one affected with a public interest, and for the Legislature to single it out for such price control is arbitrary and discriminatory and deprives it of its property in violation of the due process and equal protection clauses of the Eourteenth Amendment of the United States Constitution. Although the complaint seeks a determination that subsections (a), (c) and (d), as well as (e), are invalid, no argument is made that the mandate for the posting of the signs or with respect to their form or size or location as such is unconstitutional. Por a discussion of the constitutionality of subsection (c), see Regal Oil Co. v. State, 123 N. J. L. 456 (Sup. Ct. 1939). The attack in the brief and on oral argument was directed at subsection (e) alone.
The record presented on the motion for summary judgment showed that plaintiff was knowingly engaged in selling gasoline which was within the terms of the Pair Trade Act, R. S. 56:4-l to 6, as amended L. 1938, c. 165 and L. 1940, c. 230, at less than his posted (and fair trade) price. It appeared also that 94.44% of all the gasoline sold in New Jersey by distributors to retailers is subject to fair trade price agreements.
The statute being assailed,
N. J. S. A.
56:6-2(e), was adopted by the Legislature on the same day as the
Plaintiff insists that control of the price at which he may sell gasoline cannot be imposed constitutionally because his business is not vested with a public interest. The argument finds support in the Superior Court, Chancery Division, opinion in
Sperry & Hutchinson v. Margetts,
35
N. J. Super.
568 (1953), involving this statute. On appeal, however, although this court affirmed the judgment, decision on the constitutional issue was expressly withheld.
Sperry and Hutchinson Co. v. Margetts,
15
N. J.
203, 209 (1954). The notion that the authority of a state to regulate prices of commodities or services is strictly limited to those businesses which are said to be vested with a public interest stems from the traditional public utility concept. Such enterprises are those which are so operated as to justify the
The ensuing years, as pointed out by Justice Douglas in
Olsen v. State of Nebraska,
313
U. S.
236, 61
S. Ct.
862, 85
L. Ed.
1305 (1941), saw a great drift away from the restricted viewpoint of the
Williams
case and
Tyson & Bro., etc. v. Banton,
273
U. S.
418, 47
S. Ct.
426, 71
L. Ed.
718 (1927),
Ribnik v. McBride, supra,
and the like, on which it was based. Perhaps the clearest example of the trend is found in
Nebbia v. People of State of New York,
291
U. S.
502, 54
S. Ct.
505, 78
L. Ed.
940 (1934), .which sustained regulation by New York of the resale prices of
“If the law-making body within its sphere of government concludes that the conditions or practices in an industry make unrestricted competition an inadequate safeguard of the consumer’s interests, produce waste harmful to the public, threaten ultimately to cut off the supply of a commodity needed by the public, or portend the destruction of the industry itself, appropriate statutes passed in an honest effort to correct the threatened consequences may not be set aside because the regulation adopted fixes prices reasonably deemed by the Legislature to be fair to those engaged in the industry and to the consuming public. And this is especially so where, as here, the economic maladjustment is one of price, which threatens harm to the producer at one end of the series and the consumer at the other. The Constitution does not secure to anyone liberty to conduct his business in such fashion as to inflict injury upon the public at large, or upon any substantial group of people. Price control, like any other form of regulation, is unconstitutional only if arbitrary, discriminatory, or demonstrably irrelevant to the policy the legislature is free to adopt, and hence an unnecessary and unwarranted interference with individual liberty.” Id. 291 U. 8., at pp. 538-539, 54 8. Ct., at p. 516.
See also Sunshine Anthracite Coal Co. v. Adkins, 310 U. S. 381, 60 S. Ct. 907, 84 L. Ed. 1263 (1940).
This court drew to itself the basic reasoning of the
Nebbia
case in passing upon the legality of retail price control of
Consideration of a claim of uneonstitutionality of a statute as transgressive of property rights and the command for equal protection of law must be engaged in with an awareness of the well-settled principle that a strong presumption of conformity to State and Federal organic charters attends the enactment. The person asserting such basic invalidity has the burden of overcoming the presumption.
Jamouneau v. Harner,
16
N. J.
500, 515 (1954),
cert.
denied 349
U. S.
904, 75
S. Ct.
580, 99
L. Ed.
1241 (1955). Where regulation of a particular type of business is involved and the allegation of uneonstitutionality is predicated upon a charge of discrimination, courts uniformly sustain the law if any reasonably conceivable basis exists for separate treatment and if the treatment is not arbitrary or unreasonable.
Robson v. Rodriquez,
26
N. J.
517, 524 (1958). And it has been said that the person making the attack to be successful must negative every conceivable basis which may reasonably support the legislative action.
Dickinson v. Porter,
240
Iowa
393, 35
N. W. 2d
66, 71
(Sup. Ct.
1948), app. dis. 338
U. S.
843, 70
S. Ct.
88, 94
L. Ed.
515 (1949).
N. J. S. A.
56:6-2(e) within its own framework is not discriminatory; it applies equally to all retail gasoline dealers operating in the State.
Cf. People v. Arlen Service
Stations, 284
N. Y.
340, 31
N. E. 2d
184
(Ct. App.
1940). All persons in the same situation are uniformly affected. Whether they may be classified for separate regulation and price control depends upon the existence in their industry of an actual or potential particular evil which justifies application of the police power for the public welfare. Mention has been made above that the act under discussion may be considered as complementary to or as fortifying the fair trade act. We have no doubt on the basis of the chronology of the 1938 amendments that they both stem from legislative concern about unfair competition and unfair trade practices. As has been said, 94.44% of all gasoline sold at retail is
Although the issue has not been raised here, we note that in other states a requirement for posting of signs stating the sale price of the gasoline has been upheld.
Serve Yourself Gasoline Stations Ass’n v. Brock,
39
Cal. 2d
813, 249 P.
2d
545
(Sup. Ct.
1952);
State v. Hobson,
7
Terry
381, 46
Del.
381, 83
A. 2d
846
(Sup. Ct.
1951);
State v. Woitha,
227
Iowa
1, 287
N. W.
99, 123
A. L. R.
884
(Sup. Ct.
1939);
People v. Arlen Service Stations, supra; Merit Oil Co. v. Director of Division of Neces. of Life,
319
Mass.
301, 65
N. E. 2d
529
(Sup. Jud. Ct.
1946);
State v. Guyette,
81
R. I.
281, 102
A. 2d
446
(Sup. Ct.
1954); Annotation 131
A. L. R.
1266 (1941). The reason for the holding is that the mandate represents a proper legislative effort to control the practice of deception and fraud upon the public with respect to the price charged for gasoline. And in this connection we find that the statement attached to Committee Substitute for Senate Bill No. 261, which upon adoption included
H. J. S. A.
56:6-2(a)-(h), recited the purpose to be “to prevent fraud and unfair practices in the retail sale of motor fuels.” The
Another aspect of
State v. Woitha, supra
[227
Iowa
1, 287
N. W.
100], is strongly pertinent in this proceeding. The Iowa statute involved also prescribed the price-revealing signs, and, except in certain circumstances, forbade deviation from the posted price or change in the sign for twenty-four hours. The Supreme Court of Iowa, adverting to
Nebbia v. People of State of New York, supra,
rejected the argument that the dealer’s “sacred right of contract” was impaired by such legislation. It pointed out that the act did not say at what price the fuel must or can be sold, but
The Iowa court did not refer to any particular legislative history or commonly known economic facts beyond the widespread use of gasoline. The view was taken that if the legislative policy is to curb unrestrained and harmful competition by measures which are not arbitrary or discriminatory, it does not lie with the courts to determine that the rule promulgated is unwise. Much the same attitude was adopted by the Supreme Judicial Court of Massachusetts with regard to an enactment calling for price sign posting, in Merit Oil v. Director of Division of Neces. of Life, supra, which simply assumed that “the Legislature was motivated by knowledge that the sales of gasoline at filling stations were being conducted in such a manner as to defraud, deceive or mislead the public with reference to the prices at which the gasoline was sold.” 65 N. E. 2d, at p. 531. On the same subject the Supreme Court of Rhode Island in State v. Guyette, supra, said that the citizen’s right to pursue a lawful business is always subject to such reasonable regulation as the state may properly impose under the police power in the interest of public health, safety, morals, convenience or general welfare, and that if “a state of facts could exist which would justify legislation,” a court would presume that it did exist. The opinion pointed out that the act was obviously based upon a desire to protect the general public from the effects of fraudulent misrepresentations, concealment and deception in display advertising of a commodity which is now required for the transportation of the necessities of life and of a large portion of the working public. Accordingly, the court recognized that the use and sale of motor fuel are closely related to the public convenience and general welfare of the community. 102 A. 2d, at p. 448,
Prior to the adoption of this supplement the Report of the New Jersey Gasoline Study Commission had been submitted to the Governor and the Legislature pursuant to Assembly Resolution No. 7 of 1952. Among other things it said:
“Regardless of the temporary benefits of price wars to motorists in the form of reduced retail prices, it would appear that the consuming public somewhere along the line pays for the rather high mortality rate among retail dealers and the tremendous cost of price wars to the major oil companies.” at p. 22.
“The purpose of the act [fair trade amendment] along with the act to regulate the retail sale of motor fuels, was to overcome the existing chaotic state of the retail dealer industry and to assure a living wage to all concerned.” at p. 23.
The Report of the United States Senate Select Committee on Small Business on Petroleum Marketing Practices in New Jersey (84th Congress, 2d Session 1966; Report No. 2810) declares:
“* * * the State of New Jersey, plagued as it has been since 1950 by an almost chronic price war, was the mai’ket in which competitive problems of gasoline retailers were most pronounced.” at p. 2.
Some of the effects of the “war” were described:
“In general, New Jersey’s gasoline retailers have been faring poorly during recent years in maintaining a decent standard of living for themselves and their employees. The witnesses who appeared before your Committee spoke movingly of the economic plight in which dealers found themselves.” at p. 14.
References followed to various specific examples of the financial distress of operators and their families stemming from the destructive price competition. Included also was testimony of Governor Robert B. Meyner of New Jersey concerning his own personal acquaintance with the problem. He had talked with many dealers who said they were practically bankrupt “because they thought that the price war would only exist for a limited time.” He said also:
“They find that they are pumping gasoline for a half a cent, or three-quarters of a cent, or a cent a gallon, and they have worked 12 or 14 or 15 hours a day, and they haven’t been able to hireemployees, or, when they do hire employees, they haven’t been able to pay them the prevailing wage. I don’t think there is any doubt but what the retail dealer has suffered and suffered very much in the process.” at p. 15.
The Governor spoke also of reports of people driving into stations where prices had been reduced, buying fifty cents worth of gasoline and then blocking the entrance and exit ways. The Committee found one conclusion to be “unavoidable” :
“The gasoline price war had reduced the dealers to a desperate financial plight, from which they were unable to extricate themselves. To allow such a situation to continue would be to see many fine small businesses eliminated from the retailing of gasoline in New Jersey.” at pp. 14—15.
We must assume, particularly in view of the introducers’ statements appearing on the bills, the various committee reports and the preamble of the 1952 supplement,
N. J. S. A.
56:6-2.1 to 2.5, that the Legislature in enacting Section 2(e) had in mind the many problems associated with price wars and various unfair and fraudulent practices engaged in by dealers in selling gasoline to the consuming public. See
Townsend v.
Yeomans, supra, 301
U. S.,
at
pp.
451-53, 57
S. Ct.
842. Histories similar in kind, although perhaps more pervasive in degree, were recounted at length by the United States Supreme Court in
Nebbia v. People of State of New
York,
Sunshine Anthracite Coal Co. v. Adkins
and
Townsend v. Yeomans, supra,
all involving aspects of sale price regulation. Such histories are persuasive and aid a court in appraising regulatory legislation, although actual proof thereof cannot be regarded as essential. Eor example, in
West Coast Hotel Company v.
Parrish, 300
U. S.
379, 57
S. Ct.
578, 81
L. Ed.
703 (1937), which sustained minimum wage for women legislation, the court took judicial notice of many economic factors which would justify the control exercised. Speaking of the absence of specific proof, Chief Justice Hughes remarked that “While in the instant
From the various reports referred to above relating to the retail sale of gasoline in New Jersey, it may be said that the ban on rebates and discounts from the posted price has not proved as successful as was expected. In this con
Erom all of the above, the conclusion must be reached that N. J. S. A. 56:6-2(e) constitutes a reasonable exercise of the police power. Plaintiff has not shown to the contrary; neither is there anything of which we should take judicial notice, nor in the context of the subsection of the statute itself, which negatives the presumption of constitutionality. Ereedom to contract with Tespeet to the retail sale price of gasoline does not mean absolute freedom. The constitutional guaranty of such liberty cannot be considered as denying to the legislative branch of the government authority to impose those reasonable safeguards which, in its judgment, are necessary to the public welfare. The liberty is protected against arbitrary restrictions, not prohibitions established in the interest of the community. We find no arbitrary or discriminatory restraint in the present case.
The judgment is affirmed.
Hall, J., concurring in result.
For affirmance—Chief Justice Weinteaub, and Justices Jacobs, Ebancis, Peoctob, Hall and Schettino—6.
For reversal—Hone.