84 P.2d 767 | Wyo. | 1938
An information was filed against the defendant in this case for unlawfully selling some merchandise at less than cost in violation of Section 2 of Chapter 73, Session Laws of Wyoming of 1937, which reads as follows:
"It shall be unlawful for any person, partnership, firm, corporation, joint stock company, or other association engaged in business within this State, to sell, offer for sale or advertise for sale any article or product, at less than the cost thereof to such vendor, or give, offer to give or advertise the intent to give away any article or product for the purpose of injuring competitors and destroying competition.
"The term cost as applied to production is hereby defined as including the cost of raw materials, labor and all overhead expenses of the producer; and as applied to distribution, cost shall mean the invoice or replacement cost, whichever is lower, of the article or product to the distributor and vendor plus the cost of doing business by said distributor and vendor.
"The cost of doing business or overhead expense is defined as all costs of doing business incurred in the *339 conduct of such business and must include without limitation the following items of expense: labor, including salaries of executives and officers, rent, legal rate of interest on capital, depreciation, selling cost, maintenance of equipment, delivery costs, credit losses, all types of licenses, taxes, insurance and advertising."
Section 5 of the Act excepts from its provisions (a) merchandise sold in liquidation, (b) sales of perishable merchandise and seasonal goods, (c) damaged merchandise or merchandise deteriorated in quality sold as such, (d) merchandise sold under order of court, (e) merchandise sold in meeting the legal prices of a competitor. Section 12 of the Act provides as follows:
"The Legislature declares that the purpose of this Act is to safeguard the public against the creation or perpetuation of monopolies and to foster and encourage competition, by prohibiting unfair and discriminatory practices by which fair and honest competition is destroyed or prevented. This Act shall be literally construed that its beneficial purposes may be subserved."
The defendant entered a plea of guilty and thereafter filed a motion in arrest of judgment, claiming that the statute is unconstitutional as hereinafter mentioned. Thereupon, the court certified to us certain difficult constitutional questions, namely, whether Section 2, supra, is in violation of the 14th amendment of the Constitution of the United States, which provides: "No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty or property without due process of law," or in violation of Section 6 of Article 1 of the Constitution of Wyoming, which provides: "No person shall be deprived of life, liberty or property without due process of law," or in violation of Section 7 of Article 1 of the Constitution of Wyoming, which provides that "absolute arbitrary power over the lives, *340 liberty or property of freemen exists nowhere in a republic, not even in the largest majority."
1. The legislation now before us would probably not cause more than ordinary anxiety, or deserve greater consideration than the ordinary constitutional question, were it not for the times in which we live, the depression now existing, the unrest now prevailing, the mass of social legislation in the last few years, the wonder whither we are going, and the frequent queries whether courts are drifting merely with the tide or are rendering their decisions with that steadfast judgment as is their wont. Before discussing the direct questions involved herein, it may be well, even though resulting in the statement of seeming platitudes, to cast a hasty glance over the basic historic facts underlying constitutional law, and the fundamental principles which should govern it; also to make a brief analysis of judicial utterances in that connection, and give our own appraisal thereof. That will perhaps dissipate uncertainties and wavering doubts, lending us self-certitude in the correctness of our decision, and, we hope, affirm the faith and confidence hitherto placed in us by our fellow-men.
The Bill of Rights contained in the various constitutions, including our own, has its direct root in the ideas of the preceding centuries. Prior to the Renaissance prices of merchandise were freely regulated. It was not deemed improper to do so even in our colonies, including New York, New Jersey, Maryland and New Hampshire as late as the time of the Revolution. 28 Columbia Law Review 712, note. With the Renaissance began a new period in human history. Thoughts of liberty and freedom took possession of the minds of men, first in the field of religion, then of politics, later in the field of economics. It came to be a part of the legal philosophy of the times that each man has, as such, and because he is a human being, certain natural, *341 inherent and indefeasible rights of which no government should, or has the right, to deprive him. One of the chief exponents of that doctrine was Rousseaux, writing in his Contrat Social in the eighteenth century. See Leon Duguit in 31 Harvard Law Review 1-185. That doctrine was embodied in the Declaration of Rights of the French National Assembly of 1789 in which it is stated that the end of all union of men in society is the conservation of their natural and indefeasible rights of man, and in the French Constitution of 1791, which states that the legislative power cannot make any laws which infringe and interfere with these rights. Idem, 12, 17. The Contrat Social of Rousseaux had its repercussions and its influence upon all modern doctrine of legal and political philosophy and Duguit states that "the principle of sovereignty limited by the rights of the individual is still dominant in French classical doctrine." Idem 114. Its influence in our own country during the 18th century may be noted in the writings of a contemporary. "The end of all political associations," writes Paine in his "Rights of Man" (Conclusion Part 1) "is the preservation of the natural and imprescriptible rights of man, and these rights are liberty, property, security and resistance of oppression." Liberty of production and exchange was proclaimed no less than political liberty. The "Wealth of Nations" of Adam Smith, e.g. wielded an enormous influence. To illustrate, Thomas Paine, in his work already mentioned, writes that "government is no farther necessary than to supply the few cases to which society and civilization are not conveniently competent * * *. The more perfect civilization is, the less occasion has it for government, because the more does it regulate its own affairs, and govern itself * * *. It is but few general laws that civilized life requires." Part 2, c. 1. That theory was naturally accentuated by reason of the existence and the development of our frontier, *342 and the spirit engendered by that development has not lost all of its influence at the present time. The doctrine of natural and inherent rights to life, liberty and property was announced in the Declaration of Independence, in the constitutions of New Hampshire, Virginia, and Pennsylvania in 1776, in the constitution of Vermont in 1777, in that of Massachusetts in 1780, in that of New Jersey in 1784. Other constitutions followed in the same vein. Section 3 of Article 1 of our own constitution refers to natural rights of man and section 2 of the same article provides that "in their inherent rights to life, liberty and the pursuit of happiness, all members of the human race are equal." There are those who maintain that man has no natural rights; that none can exist except in society, and that whatever rights he has, he, accordingly, receives from society. However that may be theoretically, natural rights are recognized by our constitution. The doctrine is part of the positive law of the land, and section 6 of Article 1 of our constitution provides that no person shall be deprived of life, liberty or property without due process of law. The article evidently refers to the natural and inherent rights otherwise mentioned, and so it becomes apparent, particularly in view of the history above outlined, that the framers of the constitution meant that the protection thereof is important and that they, though loosely defined, should not be unduly invaded.
Now let us look at the other side of the problem. It may be observed that section 6 of Article 1, supra, does not state that "no person shall be deprived of life, liberty or property," but states that no person shall be deprived thereof "without due process of law." That is a recognition of the fact that the natural and inherent rights are not absolute or limited, but are relative. It is a recognition, in other words, of the police power. That power, giving the legislature the *343 right to enact laws for the health, safety, comfort, moral and general welfare of the people, is an attribute of sovereignty, is essential for every civilized government, is inherent in the legislature except as expressly limited, and no express grant thereof is necessary. 11 Am. Jur. 966-968. It is expressly recognized in our constitution, which in Sec. 2 of Article 10, states that "the police power of the state is supreme over all corporations as well as individuals."
That power, on the other hand, is not unlimited. The phrase "due process of law" has, on its face, but a procedural aspect, relating to proceedings before judicial or quasi-judicial tribunals, and in the early cases, appeal to that phrase was made from that standpoint only. It was not until the second half of the 19th century that a contrary view came definitely to be taken. The doctrine of natural and inherent rights asserted itself. So in Commonwealth v. Alger, 7 Cush. (Mass.), decided in 1853, and in Thorpe v. Rutland R.R. Co.,
Nearly every law abridges individual freedom of action to a more or less extent. In nearly all instances when one is enacted, it gives rise, or may give rise, to a conflict between such freedom on the one hand, and the power of the legislature to abridge it on the other. The solution of the conflict is judicial in its nature. *344 Courts must be, and are, whether willingly or not, the ultimate arbiters as to whether or not there is, in a particular case, an unwarranted invasion of the guaranteed rights above mentioned. 11 Am. Jur. 1087. They have found that solution, — the only one possible or just under the circumstances — in the standard of reasonableness. 6 R.C.L. 236; 11 Am. Jur. 1073-1074. That standard is indefinite. What is reasonable depends on the facts and circumstances. 11 Am. Jur. 1074; 6 R.C.L. 236, 239; 19 R.C.L. 807. Paine's thought that, as civilization progresses, men will more and more regulate their own affairs has not proved itself correct. Altruism has not proceeded that far. History is replete with the wreckage of rules of private law. It would be no less than surprising, if it were otherwise in the field of public law. As the number of people increases, as trade develops, as civic centers become crowded, as society becomes more complex, more and more problems arise which must be solved, and the freedom of movement and of action of the individuals must be harmonized with equal rights for all. That is not always easy to do. Certain rules have been laid down to help.
In order that a statute may be valid, the purpose, aim, or end thereof must be within the scope or purview of the police power, and in furtherance thereof; the means adopted must be reasonable and not arbitrary, and must be appropriate for the accomplishment of the end in view; in other words, there must be a substantial connection between the purpose in view and the actual provisions of the law. 12 C.J. 929-930; State v. Buck Mercantile Co.,
2. The statute in question condemns acts committed with intent (a) to injure competitors and (b) to destroy competition. Some contention is made that the clause of the statute "for the purpose of injuring competitors and destroying competition" affects only the clause immediately preceding, and not the clause relating to the sale and advertisement below cost. We think, however, that this was not the intent of the legislature, and we need not add anything on this point beyond what was said in People v. Kahn (Cal.App.)
3. Scope of Police Power.
In many cases it is readily conceded that the aim of *347 a statute comes within the purview of the police power. That is true, for instance, when legislation aims at the preservation of health or morals. It is not so readily conceded in cases in which the aim of the law is purely along economic lines, as in the statute before us — at least to a large extent — and it may be well, accordingly, to briefly consider that point separately. That the legislature may make provision for the economic welfare of the people generally has been decided many times, and cannot now be doubted. Miller v. Board,Approaching nearer to the question involved herein, all combinations or agreements which unreasonably suppress competition or restrain trade were illegal at common law as against public policy. 41 C.J. 101. The Sherman Anti-Trust Act was passed pursuant to that policy. Here was an interference with business in the field of competition — different, it is true, than *348
that evidenced by the statute before us, but an interference nevertheless, and the aim was partially at least the same as under our statute, namely, the maintenance of fair competition. The Clayton Act was passed in 1914 to supplement the Sherman Anti-Trust Law. Section 2 of the Act (
"Taxation may be made the implement of the exercise of the state's police power, and proper and reasonable discrimination between classes to promote fair competitive conditions and to equalize economic advantages is therefore lawful. If in the interest of the people of the state, the legislature deemed it necessary either to mitigate evils of competition between stores and chains or to neutralize disadvantages of small chains in their competition with larger ones, or to discourage merchandising within the state by chains grown so large as to become a menace to the general welfare, it was at liberty to regulate the matter directly or to resort to the type of taxation evidenced by the Act of 1934 as a means of regulation."
Some of the justices who sat in the case dissented, but so far as their opinion shows, there was no dissent from the statement here quoted.
We have no facts or figures to show how the public at large would fare if unlimited competition were permitted. In some cases at least, with the possibility in all, competitors could be driven out of business, enabling the survivor to raise the prices to the injury of the public. In regard to the use of so-called "leaders" it has at times been urged that the public at large is injured thereby; that the loss incurred by the use of such leaders will either have to be made up by higher prices charged on other commodities, or by the enforcing of various economies, such as the lowering of wages, discharge of employees, lowering of rents, etc. See Wholesale Tobacco Dealers Bureau v. National Candy T. Co. (Cal.)
It is not only recently that courts have recognized the fact that ruinous competition may be an evil. The court in Ware-Kramer Tobacco Co. v. American Tobacco Co., 180 Fed. 160, 170 (1910), stated that "while it is true that fair competition is the life of trade, it is equally true that unfair and excessive competition is death to trade." In the case of Palmer v. Stebbins, 3 Pick. (Mass.) 188, decided in 1825, approved in Whitney v. Slayron,
"Whether competition in trade be useful to the public or otherwise, will depend on circumstances. I am rather inclined to believe that in this country at least, more evil than good is to be apprehended from encouraging competition among rival tradesmen or engaged in commercial concerns. There is a tendency, I think, to overdo trade, and such is the enterprise and activity of our citizens that small discouragements will have no injurious effect in checking in some degree a spirit of competition."
In Kellogg v. Larkin, 3 Pinney (Wisc.) 123, 56 Am. Dec. 164, decided in 1851, the court stated:
"If it be true that competition is the life of trade, it may follow such premises that he who relaxes competition commits an act injurious to trade; and not only so, but he commits an act of overt treason against the commonwealth. But I apprehend it is not true that *351 competition is the life of trade. On the contrary that maxim is one of the most unreliable of the host that may be picked up in every market place. It is in fact the shibboleth of mere gambling speculation, and is hardly entitled to take rank as an axiom in the jurisprudence of this country. I believe universal observation will attest that for the last quarter of a century competition in trade has caused more individual distress, if not more public injury than the want of competition."
That was written in the days when the doctrine of laissez faire was still in vigor; when the existence of the spirit of individualism in this country was not questioned. If ruinous competition was an evil then, the legislature may, we think, recognize it as an evil now, and find a proper remedy for it. Sometimes that spirit of individualism can best be fostered by want of legislation. But that is not always true. No legislation in that connection was necessary while this country was being developed. The situation has changed. Great aggregations of wealth control much of the merchandising field of today. It is not necessary to say that that is an evil. We may even admit that it is a benefit. At the same time we still have with us the independent merchants. They, too, of course, are subject to the prohibition of the statute, but it was probably intended mainly for their benefit. They have hitherto been considered as part of the "backbone" of every community, radiating their influence throughout the length and breadth of the state, maintaining, not alone fair competition, but adding to, and upholding, the moral fibre of the communities, upon which, in the long run, the existence of the commonwealth depends. The legislature has the right, we think, to give them a fair chance in the field of competition; to give them a chance to remain a pillar of support, thus at the same time giving an opportunity for the maintenance of individualism, still of importance in our day, and *352 which, except for such legislation, might be entirely crushed.
4. Means Adopted.
We pass on to the next question, namely, whether or not the means adopted by the legislature is reasonable and appropriate to the end in view. Is it a reasonable remedy to cure the evil mentioned? That is a different question from that already discussed. But it is closely associated with it, since, if ruinous price cutting is an evil, which the legislature has the right to remedy, it can do so, it would seem, only, or at least only effectively, by some sort of limitation set upon prices. Hence some further reference will be found to the point already discussed as we proceed herein. In this case the statute has made the intent specified therein an important element of the prohibited acts, and we need but to inquire as to whether or not the legislative act in question is reasonable and appropriate in view of that fact. Great stress was laid on the oral argument on that intent, and it is contended, if we understand counsel correctly, that no matter how lawful, per se, the sale below cost may be, if it is made with the intent specified in the statute, that fact itself should make the sale actionable in a civil case and punishable in a criminal case. The claim is too far-reaching. The character of the act itself, disassociated from the intent — the sale below cost — must also be considered. The law does not deal with a man's inner feelings disassociated from his acts even in criminal cases. Wharton on Criminal Law (11th Ed.) Sec. 152. Many decisions hold that the law takes no account in a civil case of the intent with which an act is done, if the act itself is lawful. See note 62 L.R.A. 673; Cooley on Torts (4th Ed.) Sec. 534; 21 Iowa Law Review 181; 18 Harvard Law Review 41; review of the thought under the Roman and the Civil Law in 22 Harvard *353 Law Review 501-519. If one does an act which is lawful in itself, and the right to do so is absolute, he should not be subjected to the judgment of a capricious jury to determine whether or not there was some secret motive behind the act. Beardsley v. Kilmer,(1) "If one does an act which he has a perfect right to do, to accomplish some real benefit or pleasure to himself, or others in whom he has a genuine interest, and for doing which in good faith no action would lie, he is not rendered liable to an action therefor by the fact that he did it from bad motive and with intent to injure another, and such injury results."
(2) "But if one with the sole and malicious purpose *354 of injuring another, and without any benefit, interest, or pleasure (other than that which he derives from his wicked intent) to himself or others, commit an act which, if done in good faith, would be justifiable, he is liable in an action in favor of such other person for the damage he may have sustained therefrom."
The legislature may, of course, within reason, go beyond the common law rules and declare acts tortious or criminal which were not so previously. That, doubtless, would be true in connection with cases covered by the second rule above mentioned. But the legislature went beyond that rule. It has declared acts unlawful though the motive of gain co-exists with the intent to injure — acts, accordingly, which at common law would be entirely innocent, and would fall within the first of the above mentioned rules. Can the legislature modify that rule? Since the intent alone cannot be punished, we are logically driven to a consideration of the act itself — disassociated from the intent — the sale below cost — and must inquire whether that is subject to regulation, and can thus be made unlawful when done, as the statute requires, with the intent therein specified. Counsel for the defendant contends that the act is not subject to the regulation undertaken by the legislative act in question; that defendant has an inalienable right to sell his property at his discretion; that the statute fixes prices; that it violates his fundamental rights, and undertakes to take his property and interfere with his right to contract without due process of law. He relies on Wolf Packing Co. v. Court of Ind. Relations,
The statute before us covers all business and not only that which has been held to be affected with a public interest, as commonly understood. And inasmuch as it was clearly the intention of the legislature not to separate the various kinds of business, the constitutionality of the statute will depend on whether or not the legislature can make the regulation as to all sales including sales of property not affected with a public interest. A few cases directly in point have been decided lately, namely, People v. Kahn, 19 Cal. Ap. 2nd Supp. 758,
In a number of instances legislatures have interfered with, and have limited, the absolute discretion of the seller in the disposition of property not affected with a public interest. That has been true under statutes which made it unlawful for a party to sell at discriminatory prices in different places in the state. While in these cases the legislature aimed at uniform, instead of minimum prices, the interference with the right to set prices at discretion was as sharp as in the statute in question here. And the ultimate aim — sales at ruinous prices so as to stifle or destroy competition — was the same as at least part of the aim contained in our statute. In Fairmont Creamery Co. v. Minnesota,
"The whole fabric of civilized, social, and commercial life, and the enjoyment of liberty and ownership of property, are based upon compromises and limitations of the use of one's members and the control of his property. The act in question only provides against the use and sale of one's property for the purpose of destroying the business of a competitor. The owner or dealer may sell for any price he may choose, or on any terms he may adopt, without reference to what effect his action may have upon the trade or business of others, so long as he does not do so for the purpose named. It may be that by underselling others he may draw trade away from them, or, indeed, the secondary effect may be to compel them to adopt his scale of prices or abandon their business, yet, if his conduct is not for the purpose and with the intention prohibited by the statute, he is violating no law, and no one can legally object to or interfere with his methods. The statute clearly makes the purpose with which the act is done the controlling element of the offense. As claimed by counsel for the state, the statute under consideration was enacted for the purpose of supplying a defect in the anti-trust laws of the state. It is within the knowledge of all that in many instances persons engaged in the sale of commodities in general use by the people have depressed prices in one locality where there was competition and increased them in others where there was none, thus avoiding loss, until the competitor was driven out of business, when prices would be raised to an unreasonable and oppressive extent, and the people of the district or community supplied from that point would be the sufferers. It was evidently the intention of the legislature to prevent that course of conduct, if resorted to for that purpose. * * * * The legislature * * * * has determined that the prohibition of the reduction of the price of commodities in general use in any particular locality, *358
`for the purpose of destroying the business of a competitor in such locality,' and discriminating `between different sections, communities, or cities' by underselling at the point of competition for the purpose named, would be conducive to `the general welfare' of the people compelled to purchase such commodities, and by the act in question has sought to remedy the evil. Has it not the power to do so? As said in Yick Wo v. Hopkins,
In Porto Rican American Tobacco Company v. American Tobacco Company, 30 F.2d 235, the defendant was enjoined from selling Lucky Strike cigarettes in Porto Rico at a less price than in the United States. Judgment was entered pursuant to Section 2 of the Clayton Act (
"If the appellant discriminated in price between different purchasers — those of the United States and Porto Rico — and the purpose of such discrimination was not in good faith to meet competition, or to create a monopoly, the statute is violated, and the appellee, if injured thereby, is entitled to injunctive relief. * * * Ruinous competition by lowering prices has been recognized as an illegal medium of eliminating weaker *359
competitors. Standard Oil Company v. United States,
In the case of State v. Atlantic Ice Coal Company,
"If the lawmaking body within the 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."
Of analogy herein, too, we think, are the cases which deal with legislative acts aimed at preventing price-cutting of articles sold under a trade or brand name or under a trademark, and providing that when goods are originally sold under a contract fixing the retail price, they shall not be sold for a price less than that so fixed. While such statutes are made for the protection of manufacturers, they go further than that. The *360
basic theory of such statutes is, as stated in Max Factor Co. v. Kunsman,
It is undoubtedly true that under our form of government, the use of property and the making of contracts are and should be normally matters of private and not of public concern. The general rule is that both shall be free of governmental interference. Nebbia v. New York, supra. But neither property rights nor contract rights are absolute. The ordinary business is not conducted for the purpose of loss. The legislature has not undertaken to compel merchants to do anything out of the ordinary, but only what is usual and customary. It has merely attempted to have each merchant give a fair chance to the other and do business without evil intent. That cannot be considered arbitrary. "Altruism ought to have some place in the consideration of ennobling motives." Beardsley v. Kilmer, supra. We think, accordingly, that we cannot say that the means adopted by the legislature in furtherance of the purpose of the law, are unreasonable. Nor can we say that they are inappropriate. The court in Balzar v. Caler, supra, thought that the statute in question tends to encourage monopolies and destroy *361 competition rather than the contrary, on account of the fact that large industrial concerns can at all times undersell merchants with limited capital. We do not think that the legislature was compelled to accept that view as conclusive. The court in that case considered merely the question of prices. It overlooked the factor of good will. The independent, or any other, merchant may be able to maintain himself on account of such good will, notwithstanding the fact that others undersell him to some extent, provided they do not undersell him too much. See further on this subject Wholesale Tobacco Dealers v. National Candy T. Co., supra.
5. Indefiniteness.
It is claimed that the statute is void for uncertainty, because it is impossible under it to determine the cost of merchandise. It is a general and universally accepted rule that in creating an offense which was not a crime at common law, a statute must be sufficiently certain to show what the legislature intended to prohibit and punish, otherwise it will be void for uncertainty. 16 C.J. 67. However, reasonable certainty is all that is required and liberal effect is always to be given to the legislative intent when possible. 16 C.J. 68. And if a statute is susceptible of two constructions, one of which will render it constitutional and the other unconstitutional, it is the duty of the court to adopt that construction which, without doing violence to the fair meaning of the language, will render it valid. 12 C.J. 788. Let us examine the section of the statute under consideration in the light of these rules.The first paragraph of Section 2 of the act does not attempt to define the cost of each article, but merely forbids, under the conditions named, the sale or giving away of merchandise below cost. The second paragraph attempts to define the cost of a stock of merchandise, fixing it at invoice price or replacement cost, *362 plus cost of labor and overhead expenses. That is a general definition, and it would seem that no exceptions to such definition could be taken, unless it is too indefinite. The third paragraph attempts to define somewhat more accurately the cost of doing business, or overhead expenses, and requires to be included therein labor, salaries, rent, interest on capital, depreciation, selling cost, maintenance of equipment, delivery cost, etc. The court in Balzar v. Caler, supra, thought that these various items were, by this section, to be added to each item of merchandise — instead of the proper proportion thereof. There seems to be no justification for such construction. These items must be included in the cost of doing business — nothing more. The proportion to be added to each item of merchandise is not attempted to be stated, but that this must be done is implied in the language of the statute. People v. Kahn, supra. It can scarcely be doubted that each of these items are proper items to be taken into consideration. The extent thereof is not stated, and the court in Balzar v. Caler, supra, thought that this should have been done. The court said on that point:
"Moreover, the statute fails to state what period of time is to be included in estimating overhead expenses which are to be added to the invoice price of the article to be sold so as to determine the cost of resale thereof. A merchant's stock of trade varies from time to time. Meats, bakery products and certain classes of groceries deteriorate rapidly. Is the merchant to take stock and hold an accounting every time he wishes to display for sale a few leader articles below normal price for the purpose of advertisement? For the purpose of such sales is he to estimate his average overhead expenses for the period of a year, or for a month, or is he to ascertain that sum on the very day on which he proposes to sell the forbidden article? By what standard is a merchant to determine such elements as depreciation of goods, selling cost, or credit losses? What is to be the measure of the value of his equipment? *363 Is there to be no limit of expenditures for interest, insurance or advertising? The statute throws no light upon these perplexing problems. Every merchant is left to guess at the rules and standards to be applied and to determine for himself the period for which the overhead expenses are to be calculated. The section is therefore uncertain and void in that regard."
The argument at first blush seems formidable. But it would seem that, upon analysis, it will be found that if the legislature should attempt to do what that court intimates it should do, a greater interference with freedom of action would result than by the legislative act in question. Would it be feasible or advisable or consistent with inherent rights for the legislature to prescribe that a merchant shall not be permitted to spend more than a certain, limited amount for advertisement? Should it prescribe the amount for depreciation? If so, it would be required, in order to obviate constitutional objections, to make a multitude of classes, and be exceedingly careful in its classification, for the proper amount varies, as is pointed out in the above case, in the various classes of business. The proper period of time to be included in estimating overhead expenses may not be the same in the case of one merchant as in the case of another. Time may make little difference for a candy kitchen; three months time may be proper for a butcher; six months time for the clothier, for, by way of example, replacement cost may vary in the various classes of business. These illustrations suffice to show the obstacles in the way of the legislature to do what the California court above mentioned intimates should be done, and that these matters had better be left to general business methods. The legislature, doubtless, had such general business methods — reasonable standards of cost-accounting for the various classes of business — in mind and believed them to exist. If they do not exist — if cost cannot be ascertained — then the act in question *364
should be held to be unconstitutional. If, on the other hand, the cost is ascertainable, under reasonable methods, then such cost is purely a question of fact, definite and certain, and the standard of conduct set by the legislature, too, is definite and certain. The non-existence of such reasonable methods cannot be presumed by the court, and if that is so, then the burden of showing it, in order that we might act upon it, was on the defendant, for upon him lies the duty to show the statute to be unconstitutional (12 C.J. 791-794), but no evidence was introduced in this case. Cost-accounting has been in vogue for centuries, as shown in the article on that subject in Vol. 6 of the 14th edition of the Encyclopaedia Brittanica, and, as there shown, many books on that subject have been published from time to time. It is stated in Rieder v. Rogan,
"Petitioner urges that the declaration of Sec. 5 must be held void for indefiniteness unless the words `unfair methods of competition' be construed to embrace no more than acts which on September 26, 1914, when Congress spoke, were identifiable as acts of unfair trade then condemned by the common law as expressed in prior cases. But the phrase is no more indefinite than `due process of law.' The general idea of that phrase as it appears in constitutions and statutes is quite well known; but we have never encountered what purported to be an all-embracing schedule or found a specific definition that would bar the continuing processes of judicial inclusion and exclusion based upon accumulating experience. If the expression `unfair methods of competition' is too uncertain for use, then under the same condemnation would fall the innumerable statutes which predicate rights and prohibitions upon `unsound mind,' `undue influence,' `unfaithfulness,' `unfair use,' `unfit for cultivation,' `unreasonable rate,' `unjust discrimination' and the like. The statute *367 is remedial, and orders to desist are civil; but even in criminal law convictions are upheld on statutory prohibitions of `rebates or concessions,' or of `scheme to defraud,' without any schedule of facts or specific definition of forbidden conduct, thus leaving the courts free to condemn new and ingenious ways that were unknown when the statute was enacted."
In the case of Old Dearborn D. Co. v. Seagram Distillers Corporation, supra, the description of articles in "fair and open competition" was held to be sufficiently definite. In Rust v. Griggs, (Tenn.)
"Included in this assignment of error is the proposition that an unreasonable and oppressive burden is placed upon the retailer to locate at his own risk the most efficient retailer and then from the private records of such efficient retailer to ascertain his cost of distribution. We think the words `most efficient retailer' were not intended to designate any particular individual. The words were used in a generic sense. The cost of distribution, within the contemplation of the legislature, was the cost of distribution by the most efficient retailers. To ascertain such cost of distribution is no great task. Matters of that sort are readily available in numerous trade surveys contained in trade journals and other publications."
In Omaechevarria v. Idaho,
The question of definiteness of the law has herein been fully considered by the writer hereof. It is his opinion that while the defendant by his plea of guilty admitted that he sold below cost with the intent mentioned in the statute, the question is whether these acts constitute a crime; that if they do not, because of the indefiniteness of the law, punishment for his acts in *369
such case would not be due process of law; (Old Dearborn D. Co. v. Seagram-Distiller Corp., supra); that the point should, accordingly, be decided in this case. My learned associates, however, constituting the majority of the court, think that the point is not involved in this case. Their reasons, briefly stated, are these: The constitutional objection on the ground of indefiniteness is because the statute provides that the "cost of doing business," as therein defined, may be added to the invoice or replacement cost as a part of the "cost" of the article sold. The asserted defect is that the "cost of doing business" may not be known to the seller. The defendant, however, by his plea of guilty, admits making the sale below cost for the purposes denounced by the statute. It must be assumed that he knew the cost of the article, and it may be that the sale alleged in the information was for a price less than the invoice or replacement cost. Defendant's cost of doing business was not determined by the trial court, and may not have been estimated or considered by defendant in making his plea of guilty. In these circumstances a majority of the court are of opinion that it is unnecessary in this case to discuss those parts of the statute which undertake to define the cost of doing business (see Latson v. Wells,
With the reservation made by the majority of the court as above mentioned, the constitutional questions submitted to us are answered in the negative. We might add that no other sections of the statute except those herein mentioned have been considered.
RINER and KIMBALL, JJ., concur, with the reservations above mentioned.