State ex rel. Smith v. Fairmont Foods Co.

Decision Date22 January 1966
Docket NumberNo. 44248,44248
Citation196 Kan. 73,410 P.2d 308
PartiesSTATE of Kansas ex rel. Harrison SMITH, County Attorney of Finney County, Kansas, Appellee, v. FAIRMONT FOODS COMPANY, a corporation, and Ed Thorpe, Appellants.
CourtKansas Supreme Court

Syllabus by the Court

In an injunction action by the State pursuant to K.S.A. 50-505 found in the Dairy Practices Act against a company, engaged in the dairy industry as a processor, wholesaler or distributor, and its local manager for making premium gifts to consumers of the company's milk products in violation of the provisions of K.S.A. 50-503(a), the trial court issued an injunction. On appeal by the dairy company and its local manager attacking the constitutional validity of K.S.A. 50-503(a), it is held: The provisions of the statute under attack are not unconstitutional for any of the reasons asserted by the appellants, all as more particularly set forth in the opinion.

Robert M. Duboc, Kansas City, Mo., argued the cause, and James A. Williams, Byron G. Larson and George Voss, Dodge City, and Raymond Kelly, Omaha, Neb., were with him on the brief for appellants.

Kenton C. Granger, Asst. Atty. Gen., argued the cause, and Robert C. Londerholm, Atty. Gen., and Daniel J. High, County Atty., were with him on the brief for appellee.

SCHRODER, Justice.

This is an action by the State of Kansas pursuant to K.S.A. 50-505 for injunctive relief against Fairmont Foods Company and Ed Thorpe, defendants, for an alleged violation of K.S.A. 50-503(a). The trial court granted injunctive relief and the defendants have duly perfected an appeal.

The issues presented on appeal concern the constitutional validity of 50-503(a), supra.

The facts giving rise to this controversy are not in dispute.

The State of Kansas institutional this litigation against the appellants alleging that on or about the 15th day of April, 1964, they advertised, offered to give and gave free gifts, namely one quart Corning Ware sauce makers, to the retail consumers of dairy products in Garden City, Finney County, Kansas. The petition alleged that these gifts were effected through the medium of premium side panels on one-half gallon milk cartons of Fairmont Foods Company; and that these side panels were redeemable at local business establishments. The appellants have admitted the truth of the foregoing allegations except they contend that the sauce makers constitute premiums and not free gifts as alleged in the petition. The parties stipulated that the sauce makers cost Fairmont Foods Company $2.10 each; that they have a retail value of approximately $3.50 each. They attached as an exhibit to their stipulations a true copy of one of the side panels in question. (65 one-half gallon special side panels can be presented to one of the designated redemption centers for a sauce maker.)

The petition further alleged that the foregoing conduct of the appellants violated K.S.A. 50-503(a) and sought injunctive relief.

By the various pleadings the appellants have consistently challenged the constitutionality of 50-503(a), supra, on the various grounds hereafter treated in this opinion.

The matter was submitted to the trial court upon the pleadings of the respective parties, and the stipulations of fact hereinbefore mentioned.

Thereafter, on the 17th day of December, 1964, the trial court made findings, concluded that the appellants' conduct violated 50-503(a), supra; that the statute was not unconstitutional for any of the reasons asserted by the appellants or for any combination of such reasons, and entered judgment granting injunctive relief.

In the year 1957 the legislature of the State of Kansas enacted legislation which now appears as K.S.A. 50-501 to 50-510, inclusive, which has come to be known as the 'Dairy Practices Act.'

The general policy of the state which the legislature intended to further by the act is stated in 50-501, supra, as follows:

'The practices being conducted by many dairy processors, wholesalers, and distributors in Kansas of selling below cost and in the subsidization of retail dealers through secret discounts, gifts, loans and other means and the furnishing of equipment, adversely affect the stable economy of Kansas. Such trade conduct causes unfair price discrimination, destructive and predatory trade practices, tends to reduce the price paid to the dairy farmer, increases the price paid by the consumer, and misleads the public as to the true value of dairy products, and is detrimental to the public health and welfare.'

The act (L.1957, ch. 309) is entitled 'AN ACT relating to dairy products as therein defined, defining and prohibiting unfair trade practices in the dealing in dairy products, and providing penalties therefor, and providing for injunctive relief.'

As the title indicates, the act provides that violations thereof constitute a crime, and criminal penalties as well as civil remedies are provided. (See, K.S.A. 50-504 and 50-505.)

In the first section (50-501, supra), the legislative purpose declared two practices engaged in by many dairy processors, wholesalers and distributors adversely affected the stable economy of Kansas and were detrimental to the public health and welfare, these two practices being: (1) Selling below cost; and (2) subsidization of retail dealers through secret discounts, gifts, loans, etc.

The second section of the act defines certain terms used in the act.

The third section of the act (50-503, supra) provides that it shall be unlawful for any person engaged in business as a wholesaler, processor or distributor to do or cause to be done any of the acts specified in the subsections thereunder. It is to be noted the prohibitions are imposed upon the wholesaler, processor or distributor regardless of his intent or purpose. The prohibitions are not imposed upon 'retail dealers' unless they are also 'wholesalers, processors or distributors.'

Subsection (a), which the appellants are herein charged with violating, and the constitutionality of which they challenge, in pertinent part reads:

'Furnish, give, rent, lease, or lend to a retail dealer or consumer any money, equipment, fixtures, ice cream cabinets or bulk milk dispensers, supplies, or other things having a real or substantial value, or any expendable supplies commonly provided in connection with sales of dairy products to the consumer (except that he may sell dairy products) except it shall be lawful to lend or rent ice cream cabinets, milk dispensers or milk coolers for periods of not to exceed ten (10) days in any one period of six (6) consecutive months. * * *' (Emphasis added.)

Various other transactions with retail dealers and consumers are prohibited by subsections (b) through (k) and by subsection (n).

Subsections (l) and (m) were designed to prohibit sales below cost and the granting or making, either directly or indirectly, to any retail dealer of any secret discount or of any rebate. Subsections (l) and (m) were declared to be in conflict with the state and federal constitutional guarantees of due process in State, ex rel. Anderson v. Fleming Co., 184 Kan. 674, 339 P.2d 12.

The appellants throughout this litigation have consistently contended that subsection (a) involved in this case is inseparable from subsections (l) and (m), and that subsection (a) otherwise violates the due process and equal protection guarantees of both the federal and state constitutions.

The question has been settled since Nebbia v. People of State of New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, 89 A.L.R. 1469 (1934), that regulation of the dairy industry is properly within the police power of the state. In the Nebbia case it was stated:

'The fluid milk industry is affected by factors of instability peculiar to itself which call for special methods of control. Under the best practicable adjustment of supply to demand the industry must carry a surplus of about 20 per cent., because milk, an essential food, must be available as demanded by consumers every day in the year, and demand and supply vary from day to day and according to the season; but milk is perishable and cannot be stored. * * * The fact that the larger distributors find it necessary to carry large quantities of surplus milk, while the smaller distributors do not, leads to price-cutting and other forms of destructive competition. * * *' (pp. 517, 518, 54 S.Ct. p. 507.)

Further in the Nebbia case the court said:

'So far as the requirement of due process is concerned, and in the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such policy, or, when it is declared by the legislature, to override it. If the laws passed are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, and judicial determination to that effect renders a court functus officio. * * *' (p. 537, 54 S.Ct. p. 516.)

The principle of the Nebbia case has been recognized by this court in Carolene Products Co. v. Mohler, 152 Kan. 2, 16, 102 P.2d 1044; and in State, ex rel. Anderson v. Fleming Co., supra.

Once a subject is found to be within the scope of the state's police power, the only limitations upon the exercise of such power are that the regulations must have reference in fact to the welfare of society and must be fairly designed to protect the public against the evils which might otherwise occur. Within these limits the legislature is the sole judge of the nature and extent of the measures necessary to accomplish its purpose. (Schaake v. Dolley, 85 Kan. 598, 605, 118 P. 80; and Carolene Products Co. v. Mohler, supra.)

In a legal opinion of this nature challenging the constitutional validity of a statute, the court need not be...

To continue reading

Request your trial
20 cases
  • State v. Genson, No. 121,014
    • United States
    • Kansas Court of Appeals
    • 18 Diciembre 2020
    ... ... State, ex rel., v. Fadely, 180 Kan. at 665, 308 P.2d 537. It is fundamental that where ... "[T]he Fairmont court noted that the [public welfare] doctrine has been recognized in ... injurious to the public welfare, such as manufacturing adulterated foods or drugs. But KORA punishes doing nothingthe failure to fill out ... Smith v. Doe , 538 U.S. 84, 103, 105-06, 123 S. Ct. 1140, 155 L. Ed. 2d 164 ... ...
  • State v. Genson
    • United States
    • Kansas Supreme Court
    • 29 Julio 2022
    ... ... Cf. State ex rel. Smith v. Fairmont Foods Co. , 196 Kan. 73, 81, 410 P.2d 308 (1966) ("The ... ...
  • State Bd. of Nursing v. Ruebke
    • United States
    • Kansas Supreme Court
    • 15 Marzo 1996
    ... ... The STATE BOARD OF NURSING and State of Kansas ex rel. State ... Board of Healing Arts, Appellants, ... E. Michelle RUEBKE, ... State, ex rel., v. Fairmont Foods Co., 196 Kan. 73, 77, 410 P.2d 308 (1966); see State, ex rel. v ... 240, Syl. p 3, 834 P.2d 368. In the Indiana case of Smith v. State ex rel. Medical Licensing Bd., 459 N.E.2d 401, 406 n. 4 ... ...
  • State v. Mountjoy
    • United States
    • Kansas Supreme Court
    • 10 Marzo 1995
    ... ... 178 Kan. at 158-59, 283 P.2d 433 ...         In State, ex rel., v. Fadely, 180 Kan. 652, 665, 308 P.2d 537 (1957), the court addressed ... Fairmont Foods Co., 196 Kan. 73, 410 P.2d 308 (1966). In that case, the court ... ...
  • Request a trial to view additional results
2 books & journal articles
  • State Price Discrimination Law
    • United States
    • ABA Antitrust Library Price Discrimination Handbook
    • 8 Diciembre 2013
    ...(dairy products). A similar Kansas provision has been declared unconstitutional. See State ex rel. Smith v. Fairmont Foods Co., 410 P.2d 308, 311-12, 316 (Kan. 1966). 421. See, e.g ., CONN. GEN. STAT. § 22-245 (milk); GA. CODE ANN. §§ 2-8-22(a)(4), 2-8-62(a)(4) (agricultural commodities); M......
  • Kansas. Practice Text
    • United States
    • ABA Antitrust Library State Antitrust Practice and Statutes (FIFTH). Volume II
    • 9 Diciembre 2014
    ...124. State ex rel. Anderson v. Fleming Co., 339 P.2d 12 (Kan. 1959). 125. Id. at 18. 126. State ex rel. Smith v. Fairmont Foods Co., 410 P.2d 308 (Kan. 1966). Kansas 19-17 statute, which prohibits gifts and the like to retail dealers and consumers and which the court expressly upheld agains......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT