This is a bill in equity and comes to this court upon the reservation of a judge of the Superior Court, “upon the pleadings and statement of agreed facts,” it appearing that the parties “have agreed on all material facts not admitted in the pleadings and that the case is ripe for the entry of final decree thereon.” G. L. (Ter. Ed.) c. 214, § 31. The constitutionality of § 295E, inserted in G. L. (Ter. Ed.) c. 94 by St. 1939, c. 459, § 1, is involved, as well as the applicability to the plaintiffs of said § 295E, and of § 295C of said c. 94 in the amended form appearing in said c. 459.
The plaintiff Ouellette, hereinafter referred to as Ouellette, is a “retail dealer” in “motor fuel,” as defined in § 295A of said c. 94. The Sperry and Hut chin son Company, hereinafter referred tо as the corporation, is a foreign corporation authorized to do business in this Commonwealth since 1901. For many years it has been engaged in the
The corporation has about forty licensees, including Ouellette, in Massachusetts who are retail dealers in motor fuel and associated products and who have been issuing this type of stamp "in the manner and redeemable as aforesaid, to cash, and after request, to customers paying on or before the fifteenth proximo for motor fuel.” The corporation has about eighty licensees in Massachusetts who are retail dealers in motor fuel and associated products and who have been issuing another type of trading stamp in accordance with agreements with the corporation, “to cash and prompt paying customers.” A book of twelve hundred of these stamps may be redeemed by the licensee for $2 in cash or $2 in merchandise of the customer’s own selection from the stock of merchandise of such licensee. Thereafter, the licensee who has thus redeemed the book of these stamps sends it to the corporation, which pays
At the hearing before the legislative committees that considered the provisions of “said statute,” it appeared that the following conditions within the retail motor fuel industry existed in Massachusetts, and that these are among the conditions that brought about the enactment of this legislation. There had developed a practice of using misleading signs on various pumps maintained by retail gasoline dealers, and of having different prices on different pumps by which purchasers buying gasoline for their motor vehicles were deceived and misled as to the grade, quality and price of the gasoline that was being sold to them. Many dealers, in trying to obtain customers by selling motor fuel at a reduced price, had been adulterating their gasoline with kerosene, which was cheaper, and the “prohibition of a reduction from the net price of motor fuel from that posted” led to such adulteration and similar fraudulent schemes which in turn led to widespread practices of fraud upon customers of motor fuel retail sales establishments, but it is agreed that none of the conditions described before the legislative committees existed at the premises maintained by Ouellette.
The defеndant is the director of the division on the necessaries of life of the department of labor and industries, and is vested and charged with the duties of administering and enforcing the provisions of the motor fuel sales act (§ 295H added to G. L. [Ter. Ed.] c. 94 by St. 1939, c. 459, § 1).
The bill sets out the business relation of the plaintiffs, the practice of Ouellette in issuing trading stamps furnished by the corporation, substantially as set forth in the agreed facts, the interest of both plaintiffs in the subject matter of the suit, and the injury to their businesses. They pray for an injunction against the enforcement of the statute in
It seems that a brief reference to the statute and its chronological history is of importance. Kneeland v. Emerton,
St. 1939, c. 218, entitled “An Act regulating the use by retail dealers in motor fuels of signs relating to the price of such fuels,” was declared to be an emergency law and
The material provisions of § 295E that are assailed are (1) the requirement that the price posted on the pump or other dispensing device “shall remain posted thereon and continue in effect thereat for a period of not less than twenty-four consecutive hours. No retail dealer shall sell motor fuel at any price other thаn the price so posted at the time of the sale,” and (2) “No premiums, rebates, allowances, concessions, prizes or other benefits shall be ■given directly or indirectly by any retail dealer so as to permit any purchaser to obtain motor fuel from such retail dealer at a net price lower than the posted price applicable at the time of the sale.” This section also provides that where other commodities or services are sold with motor fuel at a single price or charge, such price or charge shall not be less than the aggregate of the posted price for the
We are of opinion that the allegations of the bill not in dispute, and the agreed facts, present a case over which this court has jurisdiction. Slome v. Chief of Police of Fitchburg,
We are of opinion that the material portions of the statute here assailed are unconstitutional in that they are violative of arts. 1 and 10 of the Declaration of Rights. In view of our conclusion, it is unnecessary for us to determine whether the posting of the signs relative to the giving of trading stamps is a violation of so much of § 295C as provides that the posted sign, or signs, shall state the “price” per gallon of the motor fuel sold.
Just what a trading stamp is, the nature of the transaction involved in its use, and whether traffic in it may be prohibited, are matters that have engaged the attention of many courts including our own. It has been said that the giving of trading stamps is merely one way of discounting bills in consideration for immediate payment in cash, Ex parte Hutchinson,
The defendant concedes that the “motor fuel sales act” is neither a price fixing law nor a fair trade law, but that it is designed to prevent fraud upon purchasers in the retail sale
In the effort to prevent such fraud, the Legislature has enacted that “No premiums, rebates, allowances, concessions, prizes or other benefits shall be given directly or indirectly by any retail dealer so as to permit any purchaser to obtain motor fuel from such retail dealer at a net price lower than the posted price applicable at the time of the sale.” In the Slome case, the plaintiff was displaying signs and advertising devices on various portions of his premises other than on the pumps or dispensing equipment, and the signs and devices were larger than the size prescribed by the statute. He sought, among other things, to have the defendant enjoined from disturbing any of the price signs as they then existed and from taking any action to enforce so much of § 295C of c. 94 (St. 1938, c. 411) “as relates to the size and location of price signs” at his filling station. The location and size of the price signs were the matters before the court, and it was held that the provisions of the statutе in these respects were constitutional. The questions now before the court go beyond those there decided.
The opinions of this court lead to the conclusion that to attempt to forbid the use of trading stamps generally, as a merchandising practice, is a violation of our Constitution, and one question is whether their use in an otherwise perfectly legal transaction may be forbidden in connection with the sale of gasoline. Reference has been made already to
It is not for us to inquire into the expediency or the wisdom of thе legislative judgment. Unless the act of the Legislature cannot be supported upon any rational basis of fact that reasonably can be conceived to sustain it, the court has no power to strike it down as violative of the Constitution. Mueller v. Commissioner of Public Health, ante, 270. But unless justified as a valid exercise of the police power, the act' must be declared unconstitutional because the enforcement of it will deprive the plaintiffs of rights secured under the Constitution. The defendant seeks to sustain the act specifically upon the ground that it is reasonably calculated to prevent fraud in the sale of motor fuel, and the determination we are called upon to make is whether the act has a real and substantial relation to that or is a clear and arbitrary invasion of the plaintiffs’ rights guaranteed by the Constitution. The police power may be exerted in the form of State legislation where otherwise the effect may be to invade rights guaranteed by the Constitution only when such legislation bears a real and substantial relation to the public health, safety, morals, or some other phase of the general welfare. “A State cannot, 'under the guise of protecting the public, arbitrarily interfere with private business or prohibit lawful occupations or impose unreasonable and unnecessary restrictions upon them.’ ”
It was said in Slome v. Chief of Police of Fitchburg,
We think it clearly appears that the aim of the statute construed in the Slome case was to prevent the use of misleading signs, and that this is the fraud referred to in that opinion. Prior to the enactment of St. 1938, c. 411, there was no law requiring that the price of any gasoline be placed on the particular pump from which it was sold, or any regulation relating to the posting of price signs. Prior to that statute, as it appeared in the Slome case, these signs were placed on sidewalks, fences, between the sidewalk and the
But the present statute goes beyond the requirements of that construed in the Slome case, and, under the guise of protecting the public against fraud, has enacted the additional provisions that are here assailed. (G. L. [Ter. Ed.] c. 94, § 295E.) We assume, without deciding, that the language of said § 295E is comprehensive enough to prohibit the giving of trading stamps with the retail sale of motor fuel, and in order to invalidate this prohibition we must be satisfied that the means adopted will not accomplish the aim intended, that is, to prevent fraud or that the prohibition is unreasonable and arbitrary. In People v. Gillson,
Trading stamps have been in use long enough so that any purchaser of merchandise who is interested in acquiring and converting them to his advantage, cannot be said to be likely to be deceived as to their value. As appears from the agreed facts, these stamps represent certain well defined and easily understood rights that the recipient acquires, and there is no reasonable cause to believe that the dealer who offers them in consideration of cash or approved credit sales will resort to fraudulent practices. The price fixed by Ouellette for the sale of his gasoline, if paid for in cash or if sold upon credit, entitled the purchaser to trading stamps. Such a transaction, so clearly free from illegality, has no reasonable connection with any possible fraud in the sale of motor fuel. On the contrary, under the guise of protecting the public from fraud, the enforcement of the statute would result in an arbitrary interferencе with business and an irrational and unnecessary restriction.
There are many instances in this Commonwealth where
It is contended in the case at bar that the fact that the price posted on any pump shall remain thereon and continue in effect for twenty-four hours will result in a disappearance of the practice of adulterating gasoline, and will also protect the public from being deceived as to its price, quality or grade. Upon reflection, it would seem that the result is likely to be the very reverse. It is to be observed that the statute does not provide any time for the posting of the price notice. A dealer on one of four corners of an intersection, each corner having a filling station, may post his price at eight o’clock in the morning. The next dealer may delay the posting of his price a few minutes and thereupon display a lower price. The other two dealers may follow consecutively with still lower prices. Under the terms of the statute there can be no changes in the prices posted for twenty-four hours. Nothing can be
It is a well known fact that gasoline is dispensed, as a rule, to the retail trade from underground tanks limited as to capacity which must be refilled from time to time from supply wagons. Account does not seem to have been taken of the fact that during any twenty-four hour period the wholesale price of gasoline may change either up or down, and that regardless of this reasonable possibility, the retail dealer, under the statute in question, may be deprived to his loss of an opportunity to meet an increase in price or to pass along the benefit of a reduction to the purchasing public.
Even if the regulation of the price of gasoline, in so far as the protection of the public is concerned, cannot be left to competition, and, as has been decided, the posting of price signs limited as to size is to be helpful to the public in the direction оf their protection, it surely is not necessary for this protection that the price signs should not be changed for twenty-four hours. The dealer may fix his own price. It may vary from the price of his competitors. The source of his supply, the nature of his business, and other factors may warrant him in offering gasoline at his price. The fact that all prices must be posted does not relieve the purchaser, if he has any real interest in the subject matter, from the exercise of some degree of vigilance in order to determine what price he is to pay for the particular brand of gasoline that he is buying. Upon his approach to a filling station he has no means of knowing from apрearances when the price was posted. The twenty-four hour period may have just begun or be just ending. The law gives him no greater security than he had before. After all, he does not have to purchase at any station unless he wishes, and whether the price is posted at six o’clock in the morning or at noon, it is that price which the purchaser must consult, if he cares to, in order to determine whether he is
It follows that the plaintiffs are entitled to an injunction against the defendant restraining him from interfering with or prosecuting the plaintiffs or other licensees of the corporation in respect of the matters covered by, and in accordance with, this opinion, the details of which are to be settled by a judge of the Superior Court.
Ordered accordingly.