Paraco, Inc. v. Department of Agriculture
| Decision Date | 05 June 1953 |
| Citation | 118 Cal.App.2d 348,257 P.2d 981 |
| Parties | PARACO, Inc. et al. v. DEPARTMENT OF AGRICULTURE et al. Civ. 8223. Sac. 6294. |
| Court | California Court of Appeals Court of Appeals |
Rowell, Lamberson & Thomas, Fresno, for appellants.
Edmund G. Brown, Atty. Gen., and Paul M. Joseph, Deputy Atty. Gen., for respondents.
This is an appeal from a judgment entered after demurrer sustained without leave to amend. The complaint contains two counts. One asks an injunction restraining respondents from enforcing against appellants the provisions of sections 20800 to 20806, inclusive, and 20843, of the Business and Professions Code, which sections deal with the sale of lubricating oils. These sections declare that crankcase drainings, lube distillate or any other petroleum product shall not be sold for use as lubricating oil in an internal combustion engine unless free from water or suspended matter and possessing certain flash point ratings; that if lubricating oil sold has been previously used for lubrication of such engines, or gears or shafts attached thereto or for any lubricating use or has been re-run or filtered, redistilled or claimed the container shall be labeled 'reclaimed motor oil' or 'lubricating oil reclaimed' in red letters of specified type and size; that anyone who buys, sells or stores lubricating oil required to be so labeled shall keep records of purchases, sales and storage. The second count in the complaint asks declaratory relief based upon a claim that the code sections are so uncertain and unintelligible that plaintiffs are unable to know what the law requires them to do in order to avoid violation thereof. The factual allegations of both counts are identical.
Upon an appeal from a judgment entered after a demurrer sustained all the allegations of the pleading which are well pleaded must be taken as true and additional facts of which judicial notice may be taken will also be considered though not pleaded. Talley v. Northern San Diego Hospital District, 41 Cal.2d 33, 257 P.2d 22. The several appellants own and operate petroleum refining plants; a large part of their businesses consist in collecting used lubricating oils, re-refining them and selling them under established brands at prices from 30 to 50% lower than prices of virgin stock oils sold by others; appellants' oils exceed the minimum standards required by the code for lubricating oils; although the sections requiring used oils to be labeled before sale, as reclaimed oils, have long been in the code, yet respondents made no attempt to enforce the labeling provisions because it was impossible to determine by any test whether an oil was virgin stock or re-refined; since 1949, however, and since the enactment of code section 20806, which requires record keeping, respondents are demanding of appellants that they keep such records and do the required labeling of their re-refined oils, and are threatening criminal prosecution if appellants fail to do so; re-refined oil, such as is marketed by appellants, is not merely a reclaimed oil, but is an oil which has been completely re-refined by being subjected by appellants to many more steps than are involved in mere reclaiming; the word 'reclaimed' is understood by the public as a synonym for the word 'inferior' and the enforcement of the labeling law would ruin appellants' market and do them irreparable injury; to lable appellants' oils as 'reclaimed' would in fact mislead the public because of the public's understanding that reclaimed oils are inferior and thus cause them to refuse to buy high quality re-refined oil not inferior in any respect; appellants' oils are in fact equal to the best, and superior to many, of the virgin stock oils; enforcement of the law, by making it difficult, if not impossible, to market re-refined oil once used, would result in the waste of a valuable asset and prevent conservation of limited underground petroleum stocks; by lessening the sale of re-refined oils the producers of virgin stock oil could easily maintain high prices to the detriment of the public; out of state re-refiners who ship their oils to this state are not subject to the record keeping requirements of our law and are thus immune to the labeling requirements because of the impossibility of detecting re-refined oil from virgin stock oil, and the enforcement of the law would benefit them at the expense of appellants and others engaged in producing and selling re-refined oils in the state; the code requires not only that oil once used be all labeled 'reclaimed' before being again sold, but also requires that any blends of products consisting in part of such oils be so labeled and these provisions are made applicable also to oil that has not been used but has been rerun or refiltered or redistilled, thus introducing such doubt into the meaning of the legislation as to make it impossible for appellants to know when they are complying therewith. Both counts in the complaint allege that by reason of the foregoing facts the statutory provisions and their enforcement deprive appellants of liberty and property without due process of law, deny to them the equal protection of the law and deprive them of equal privileges and immunities of the law; that said sections further grant privileges to certain persons while unreasonably discriminating against appellants; that they do not have a uniform operation and are fatally vague and uncertain.
All parties hereto agree that the general subject matter of the legislation attacked as being unconstitutional, that is, the regulation of the sale of petroleum products, is within the police power of the state and that the subject statutory provisions constitute an attempt on the part of the legislature to protect the public from fraud, deception and misrepresentation in the sale of such products. All parties further agree to the general limits of the constitutional exercise of the police power in that the power cannot be exercised unreasonably and that all police regulations must be reasonable under all circumstances. 11 Am.Jur., 'Constitutional Law', sec. 302. 11 Am.Jur., supra; Miller v. Board of Public Works, 195 Cal. 477, 234 P. 381, 38 A.L.R. 1479. It is precisely within this field of reasonable exercise of the police power that the parties are at issue.
Taking the allegations of the complaint at their full face value, as we must, the position of appellants may be briefly stated in this way: They are selling lubricating oil which, while it has been used at least once and perhaps many times, is by reason of the rectification processes to which they subject it equal to the best and superior to many of the virgin stock lubricating oils. Their product, when readied for sale by them, is incapable of being distinguished from virgin stock oils by any scientific tests. Oil, they allege, is not worn out by use, and in fact is not changed thereby, nor is it deteriorated except in ways completely rectified by their re-refining processes. It picks up impurities during use which are removed by appellants just as impurities are removed from crude in the process of making refined lubricating oils from the natural product. These impurities they remove and thus restore the oil so that it is the same oil as the virgin stock oil which was first put to use. Therefore, they say, that if the buyers asked for virgin stock oils at the market place and the products of appellants were sold to them they would not be damaged in any way since what they bought would be just as good as, or better than, that for which they asked. Following out this argument, they say that to compel them to place upon their product a name which in the eyes of the buying public brands it as inferior is to compel them to misbrand their product and is an unreasonable, unnecessary and arbitrary exercise of the police power to their detriment.
It is a matter of judicial knowledge that the state is dotted with retail establishments for the sale to the public of lubricating oils for use in internal combustion engines; that severally these outlets are almost uniformly engaged in selling a single brand of lubricating oil. Once will sell Standard, another Shell, another Union and so on through the rather extensive list of great corporations engaged in the manufacture and sale of petroleum products of various kinds, including lubricating oils; that generally the buying public expect in these severice stations, so called, to buy, and without material exception they are sold, lubricating oils that have never before been used.
With this wide market in which oil never before used is being sold, appellants are in competition. Their business is...
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