*1 Corporation Union Carbide Carbon River Distributors, White Inc. 2d 455
5-553 W. S. 7, 1955. Opinion February delivered Eichenbaum, Walther, Scott Miller, S for appellant. W. D. Murphy, Jr., and Wright, Harrison, Lindsey é Upton, for appellee. J. This appeal seeks sustain the consti-
Ward, of Act 92 tutionality of 1937 known as the commonly “Arkansas Act”, Fair Trade found in Ark. 70-201 through Stats. 70-208. § Appellant, corporation, an manufactures anti- freeze which it sells under product the trade name of Act it Under the contends “Prestone”. the right in Arkansas to sell all retailers Prestone require per at the gallon. Appellee, consumers $3.75 Batesville, a retail store in ad- corporation operating *2 vertised and sold Prestone per gallon. Ap- $2.97 under pellant Court, pro- filed suit Chancery to restrain Act, appellee, visions of and. the § Court refused to on the enjoin ground that Act 19 and Article 2 of 2, 8, 18, violates the Arkansas §§ Constitution.
The our scope investigation been restricted of the parties and by agreement conclusion we reach, hereafter all as stated. presently No Federal constitutional question is involved, and all facts are pertinent stipulated. Appellée contends since its Act, that said adoption, rendered void Acts have because similar been held in conflict with the Anti-Trust that Act, Sherman to be effective the Act to be would have re-enacted. We have chosen to grounds on other place decision and therefore pretermit question. this presented for our question determination can respects.
also be further limited three Act Disregarding 6 of (a) there is no con- § appellee appellant tention here that does not have the fix Act, under the to at right, which Prestone it public provided must be sold to does so by written either retailers, with agreements direct or through the Act its wholesaler. Section 6 of however is designed bind to sell at the appellee fixed appellant it signed even no though agreement [the retailer] held title to lawfully even though was lawfully possession quantity Prestone. So hereafter when of the effect or speak we validity the “Act” we will 6. refer Section We particularly make no find- as to the ing constitutionhlity remainder of the It if deleted. is necessary 6 is to explain that § with have contract appellant did one retailer in Ar- at per gallon, $3.75 kansas to sell and that under this the Act binds every terms of other retailer in Ar- sell at [including appellee] kansas the same price. (l>) holding While trial the Act court, un- constitutional, stated it violated §§ 2, 8, 18, 19, and 29 of Article 2 Arkansas Constitution, burden says of our will relate io consideration deprived property no one process of his shall without due doing law, and in so we do not intend to intimate that other sections are relevant to the issue here.
(c) justifi- We also eliminate consideration of prevents ground cation competition the Act on the ruinous by selling caused below cost, first, because purpose we do conceive that to be the of the Act stipulated secondly, appellee and, because it made *3 profit by selling per gallon. a. at $2.97 that-, - stipulated (a) bearing It is Prestone, open competi- Trade-Mark, is and has been fair and products in this with slate of the same tion class produced requirement and distributed [a others of (b) Appellant, through the Act]; its distributor, on or September agree- about 17, 1952 entered into a written ment with a selected whereby retail dealer in this state agreed said retailer to sell Prestone to the price agreed price at than less on, which $3.75 per gallon; (e) September appellee Since 1952 has advertised for sale and has sold at retail Prestone for price, than the fixed less unless restrained will con- (d) pertinent appellee tinue do so; At all times hereto agreement had-notice of the of existence the aforesaid price required [as and of the retail mentioned therein (e) Act]; ofAll the said sales of Prestone made appellee profit; (f) a wore at There are other retail dealers in the area Batesville who sell Prestone at the they fixed but have threatened to discontinue handling Prestone and switch to other brands unless appellee stopped from-selling price. is at the reduced handling If such dealers should so discontinue Prestone appellant lose a would substantial amount of business. appellee if Likewise, is restrained, other retail throughout may dealers the state switch to other brands, resulting appellant’s price structure Arkansas and
561 rights being its under Arkansas Fair Trade Act jeopardized; (g) right appellee, right The if of such to sell Prestone at the a exists, reduced is valuable right, property (h) Appellee signed any and; has not Agreement appellant Fair Trade with or with of agents latter’s or distributors. issue. The Under the above statement the one pivotal is, issue to be considered it, as we view whether [including, ] course, the Act constitutes an of thereof police power Legislature. abuse the Arkansas question is thus stated for these reasons: (a) appellee right property The. own its sell price agreeable right guaranteed by at a to it is a property right. a Constitution since valuable That right property right siieh sell valuable cannot appellant stipulated be denied.' First, á “is right.” property Secondly, valuable our courts have recognized Coppage Kansas, this to be fact. U. 59 L. S. S. Ct. Ed. 441, the court said: “In- right personal liberty right and the cluded private property right is the to make contracts ..... acquisition property. right If this ... .. arbitrarily struck down interfered with there is a sub- impairment liberty long stantial established con- ” stitutional sense. *4 (b) property right” belonging the “valuable Since appellee guaranteed to is the. constitution and has away, not been contracted it axiomatic, is or it at questioned by appellant, legislature least not the right by away an no enactment to it take unless it right police power, has the virtue its inherent and protect only public principle then to the welfare. This is so well established our courts that citations would appear recognized useless. It if not most all upholding denying the decisions both the constitu- tionality of Fair Acts, Trade some of which will be It mentioned later. was the basis of our own decision in Davis, 204 Ark. Noble v. 2d 189, S. W. specific Consequently
will be discussed hereafter. our reasonably task determine if it can is to be said that promotes in92, effect, said Act welfare. But attempt specific to reach a conclusion on before point this w.e helpful just will be to what the Act understand really accomplishes. or does Considering Act
What the does. in relation appellant particular virtually gives case, it to this right to fix the at which absolute Prestone must public consuming to the in Arkansas be sold without regard to the cost or of manufacture distribution. We forgetting it must are first contract with one not appellee knowledge retailer in the state and must have price, provisions but of contract and the fixed these merely than more form substance indi- consist cate against desperate attempt hedge charge Nobody unconstitutionality. feasibility doubts the acquiring appellant one contract dealer out of the feasibility state, retail hundreds of dealers bringing this to all other dealers. If information securing binds all others, contract one dealer then with corollary such that, contract, would be absent frightful It is to think not bound. a device others are destroy easily could the constitutional bul- so concocted personal public protecting liberties wark welfare. opinions supporting discussion
Considerable distinguish- Acts has been devoted Fair Trade similar price fixing, concluding ing from horizontal vertical only with the former and that it is deals that the Act objectional. the merit or rele- evaluating Without at vancy discussions, suffices time to this of such permit price fixing to the the Act does reassert mentioned. heretofore extent There are several considered mat- Public Welfare. impel conclude that us to effect ters which protect welfare and therefore Act is our Constitution. violates *5 competition recog- long is the
(a) free Full and economy. Trade-marked com- articles nized basis in large commodities common prise use number of a today knowledge and it is common that the number is increasing. nothing There is in the Act to limit the way extent of increase. We can think of no in which public being jeopardized welfare was under the competition system prior suggested of free to 1937 which necessity imposing advisability the restrictions can contained Act and we think of none that exists today. contrary, generally To we believe it is recognized public that the interest of the is best served by petitive opportunity buy freely to commodities in a com- recognize competition pre-
market. We provisions degree a served to under the of the Act, but degree. it it must be admitted that is also restricted to a only gen- The Act can be sustained if it enhances the only if eral welfare and not it restricts small extent. are unmindful
We of the fact that a trade-mark protection, recognized has value which is entitled to as is by appellant. many cited eases The answer to this appellant’s ample contention trade-mark had prior protection any to the enactment of Fair Trade gives protection [by Act, and Act it additional though Appellant contract] right even 6 be deleted. has no expect protection additional if it is at ex- pense welfare. History (b) promul- history the Act. The justifies
gation they of Fair Trade Acts the inference thought were to benefit a few manufacturers and general public. Nowhere has our attention been called demand for the enactment legislation. contrary appears of such On the support. special groups have been active in it’s Report attention been directed to Our No. Representatives, Congress, House of 82nd 2nd Session, among things, which, other it was said: “By far the most enthusiastic advocate of fair trade legislation druggist is the retail and the most active group association, the National his Association of Druggists. century Retail For over half this Asso-
564 single fighting fair trade. Almost for
ciation has been Miller-Tydings adoption of handed it secured Act . and state laws . . most Very those in other than few manufacturers goods drug, indi- either toilet industries and cosmetic publicly through vidually have their associations upon Congress legislation price urged maintenance repre- years of lack There also noticeable recent . . . support general of fair trade. sentatives appeared, group at least or farm No labor years, trade.” in favor of fair in recent Report Federal find in The we Likewise of- Maintenance, it Price on Resale Trade Commission that: stated in originally
“Minimum resale maintenance was highly manufacturers of advocated trademarked, individualized, products
trade-named, or branded as a protecting means them from unrestrained cut- ting products among to whom the dealers were sold finally outright. states, When enacted and Congress, urged however, its enactment was almost organized entirely by groups a few well dealer aas eliminating price competition both of dealers means using method of distribution and of the same dealers using different methods of distribution.” new and Although
(e). Own Decisions. this is the first Our interpretation court time Act 92 has been before this relative to for constitutionality, yet we course should clearly by take indicated former decisions here closely on related issues. Beaty Humphrey, attention to
We call State Auditor, Ark. 115 W. 2d not because 195 S. reached there but because the of the final conclusion significant reasoning used is because throws there emphasized. light will be on later decision which Reaty constitutional Act this court held case pre barbering by practice regulated examining, licensing, training scribing a method prescrib- maintaining sanitary conditions, barbers ing fixing prices certain fees but not ren- services legislature It any right dered. was said that if the had pass police power the Act “it comes within the by adopting language'from It was then said, State.” *7 another decision, “Therefore, we are confronted with question regulation occupation of whether the of the necessary public of barbers is to the health.” It was proper protec- Act then concluded was for the public, proper consequently, .and, tion of the exercise . police power, warning: but not without this “The police power public of the state is one founded neces- in. sity necessity justify and this must exist in order its justice opinion The' exercise.” was written Mc- Haney. years McHaney four' later
Just Justice wrote the supra. Davis, Noble v. decision time This the court constitutionality called on to consider the was of Act charges 432 of 1941 which fixed to be made bar- holding bers for their services. Act 432 unconstitu- employed language ap- reasoning the court tional plicable to the matter here under consideration. purpose like Act 92, declared its to be “the
protection public safety, gen- health, welfare and prosperity .”, eral . . but the court said this “is the non-existing declaration of a fact.” It was stated barbering profession right although a of common subject regulation police power, under the but that justification regulatory “except there is no of a statute public they as relate to the and are for its benefit.” mentioning purpose After to fix minimum that the real of Act 432 was
prices regulate hours of work, court said: just purposes
“Now connection these what three ‘protection public safety, with the health, have general prosperity,’ welfare and or with them, either of perceive. How can the is difficult a barber charges a haircut or or the shave, for commission the pays shop opens or the hour the barbers, owner or public safety, pros- welfare health, closes affect or visionary perity? connection is and not Such real.” The underlying principle upon which the court rested its think decision, which we controls matter under here, consideration is well stated the court following language from adopted Am. Jur.:
“The mere assertion the Legislature that a statute relates to the public health, or welfare safety, does not in itself that statute within bring police of a power state, there must be an obvious always and real connection between actual provisions the police and its regulations purpose avowed and the regulation adopted must to ac- reasonably adapted complish the end attained. A to be statute or sought ordinance real, substantial, which has no or rational relation to health, moral, safety, welfare is a palpable rights invasion secured by . *8 fundamental law and cannot be sustained' as a legitimate exercise of police power. One application of the familiar rule that the validity of an act is to be deter- mined its practical operation effect, and and not by its title or declared purpose, is that a constitutional right cannot be abridged under by legislation the guise of police regulations. exercise of the power must have a substantial basis and cannot be made a mere pretext legislation does not fall within it. The has no under Legislature power, the guise police regulations, to invade the personal arbitrarily rights and liberty citizen, individual to interfere with private business or unusual impose and unnecessary upon restrictions lawful occupations, or invade prop- erty rights.” (d) Supporting Decisions Other States. Fair from
Trade Acts, like our Act, have been held unconstitutional in Florida, Michigan, Georgia. We shall examine these decisions in the order named.
Florida was the first state to hold a Fair Trade Stores, unconstitutional, Liquor Inc., et al. v. Con- tinental Distilling Corp., 40 So. 2d decided in 1949. of the reasons Perhaps gist given for the court’s ‘‘ in its own conclusion couched words: Constitutional granting sovereign power law never sanctions group against be one group citizens to exercised another general [the unless the court’s own welfare emphasis] acknowledging The court, is served.” after right property which a has in a. trade- manufacturer protected mark property that it be should and is as .other rights, may.claim said: “If he additional.ad- n vantages, emanating then he must look to the law from police power. advantage personal the tinguished If as dis- general public police, power
from the then the upon may commenting other,de- invoked.” be uphold many Act, cisions which the court states that proponent’s of them rested on “the general statement that the quoted welfare then served,” would report language of Federal Trade from Commission opinion, proved just opposite. which, the court’s Michigan down was next to strike a. Fair Trade Act Shakespeare Lippman’s case Tool Shop Sporting Co., 334 Mich. Goods N. 2d 268. W. approved reasoning specifically The court there supra, holding could not be case, the Florida police power state, sustained under process and that clause, the due bore no violated court relation to the welfare. The reasonable took note considering of the states the fact most upheld constitutionality, Act had its but the same that it said reasoned view was that of the better considered Supreme Court. the Florida
Georgia. Perhaps thorough the most consideration given to this kind of an Act court has been that Supreme Georgia given by the Court of been that has which has twice held such Act unconstitutional. Grayson-Robinson Oneida, v. Stores, Inc. case, first 1953, in 2d decided Limited, 161, 209 75 S. E. Ga. referring merely by to its the Act court struck down stating reasoning that the Act in decision and a former provides, part of the constitution that offends “ prop liberty, deprived person or life, ‘No shall be process except erty by. law’.” due being thought perhaps by proponents It of Fair Supreme Georgia Acts Court of Trade had given question due consideration to the or that the declaration dictum, mentioned above obiter was the same question again presented to the court the case of Company, Cox, et al. General Electric Ga. January S. E. 2d 514, which decision was released emphasize 1955 and which is final at time. this We this expresses regard case because it arguments our view in to certain many which have been deci advanced appellant sions relied on The case, this such as: purpose promote declared of the Act to wel property right adhering fare The ; to the trade-mark, and; prerogative of this court be the final arbiter. to. Among things other the court said: “What the courts of controlling, other states have decided is not and this is powers one of the few left to states to decide them regardless Supreme selves of what Court of the may may United States not have decided.” The last sentences'express regarding two our view the relation They of Act 92 own Constitution. read: petition “The scheme described now under permits guise consideration of manufacturer, under protecting property rights his in a trade name and product trade-mark to control of his down through the channels of trade into the hands of the persons ultimate with consumer, and into the hands of whom he has ho contractual relation whatever. This clearly provisions process due violates the statute Georgia.” clause of the Constitution of the State agree We also original with a statement, us, with generalization, the effect that: It is a but not an say overstatement, to prices” that the effort to “fix by groups made something who desire to sell for more sponsoring group than the purchasing believes that the pay “something” would for an without en- price. apparent forced fixed It would seem principal objective of minimum maintenance is protection profit margins for retailers and dis- unwilling pressure tributors unable or to meet the *10 competition.
569 upholding Constitutionality. Decisions It would proper opinion specifically- not seem to close this without recognizing many uphold are there more decisions ing rejecting the Act than are it, there and we do impression want to leave are not reluctant we impressive authority. highest to differ with such The courts in seventeen have Fair states concluded Trade containing Acts, Act, sections like 6 of our constitu § tional. Most of are listed in the decisions Shakespeare supra only say We can case, that we have carefully considered each of these decisions and remain certainly unconvinced. contain These decisions such justify thorough merit as to than are more comment we justified making opinion. length due to the this of court,
Finding error, no the trial the decree of affirmed.
Justices McF addin George concur. Rose Smith concurring. majority Ed. McF F. addin, Justice, holding of § limits the effect its to 6 of the Fair Arkansas (Act 1937). Act “non-signer” That section referred Trade agree as I ma section. with what the jority invalidity has said 6 of but about the Act; go say I further entire Act 92 1937 is uncon authority stitutional, under the own of our case of Noble v. Davis, 204 Ark. S. W. 189. In we 2d that case 156, 161 considering were Act 432 of 1941, which authorized State Board fix Barber Examiners to the minimum price throughout for barber services held State. We price that Act unconstitutional, because was a fix ing Act and violative of the Constitution. If the State Board of Barber Examiners fix cannot the minimum of a haircut or shave, then I cannot imagination, see stretch of the how, the Union Car- Company bide should be fix the allowed, contract, may for which Prestone be sold its contract deal- ers in the State Arkansas. So 1 think v. that Noble disposes Davis of the entire Act here at issue. Gipson Morley, 217 Ark. S. W. 2d majority upheld this Court *11 be for liquor might for fixing
allowed I time have all the because case, in that I dissented sold. Pre- on liquor, that price-fixing maintained —whether or service, article, other shaves, haircuts, stone, I anticipate of the Constitution. violative commodity —is over- Morley v. will be in Gipson holding day that some as treated v. Davis will in Noble holding ruled, and the in that of decisions The trend policy. our fundamental direction. Judge. Cockrill,
Barr 6W. 2d S. 5-587 1955. February 7, delivered Opinion Brown, L. E. Surrey Walter Harry Crumpler, Melvin Gilliam, Mayfield, Robert C. E. for Compton petitioner. Thurman,
Barber, é respondent. Henry Petitioners are resi- Justice. Millwee, Minor W. a writ of counties and seek and Union dents Columbia Court of the Pulaski Circuit against judge prohibition trial with the court from proceeding said to restrain in which petitioners there pending action certain defendants. were made party