Carroll v. Schwartz

• Decision Date: 25 July 1940
• Citation: 14 A.2d 754,127 Conn. 126
• Court: Connecticut Supreme Court
• Parties: CARROLL v. SCHWARTZ et al.

14 A.2d 754

127 Conn. 126

CARROLL v. SCHWARTZ et al.

Supreme Court of Errors of Connecticut.

July 25, 1940

Appeal from Superior Court, Fairfield County; Alfred C. Baldwin Judge.

Action by Ralph J. Carroll against Harry Schwartz and another for an injunction restraining the defendants from the practice of selling groceries at less than cost, brought to the superior court where a demurrer to the complaint was overruled. From a judgment rendered after defendants refused to plead over, the defendants appeal.

No error.

Paul J. Grumbly, of Norwalk, and A. D. Slavitt, of South Norwalk, for appellants.

A. A Ribicoff and A. S. Bordon, both of Hartford, for appellee.

Argued before MALTBIE, C.J., and AVERY, BROWN, JENNINGS, and ELLS JJ.

AVERY Judge.

The plaintiff, Ralph J. Carroll, operating a meat and grocery store in Stamford, brought this action against Harry Schwartz and Irving Weitz, partners, operating retail meat and grocery stores in Stamford and Norwalk under the name of Budget Market. The plaintiff claimed that the defendants offered to sell and sold merchandise at less than cost with the intent to injure competitors or destroy competition and asked for an injunction. A demurrer to the complaint was overruled and the defendants having refused to plead over judgment was entered in favor of the plaintiff, from which the defendants have appealed. The sole question raised by the demurrer is that the provisions of the unfair sales practice law, 1939 Supplement to Connecticut General Statutes, §§ 922e, 923e, and 924e, are unconstitutional, being in violation of Section 1 of Article XIV of the Amendments to the Constitution of the United States. Section 922e relates to definitions. Sections 923e and 924e are printed in the footnote.^[1] An examination of these sections at once establishes that the law is not a penal statute. The only method of enforcement provided is by injunction at the suit of a party injured. It is further to be noted that it is not a price-fixing law. The law does not attempt to fix the price at which articles of merchandise shall be sold. The obvious purpose of the law is to create a right of action for injunctive relief in favor of a party aggrieved by the sale or offer of sale of merchandise by a competitor at less than cost with intent to injure competitors or destroy competition. In order to make out a case, the plaintiff must first show advertising or a sale or offer to sell merchandise at less than cost as defined in the law, and, second, that such sale or offer to sell was with the intent to injure competitors or destroy competition. It is to be further noted that under this law numerous exceptions are provided. Sales at less than cost are permitted under many circumstances enumerated in § 924e. The obvious purpose of this legislation, as its title implies, is to prevent unfair competition by making or offering to make sales at less than cost for the purpose of attracting business away from a competitor, driving him out of business and stifling competition.

It is possible, unless restrained by law, for a powerful merchandiser with large resources to continue to sell at a loss in a community and thereby drive weaker competitors out of the market, establish a monopoly, and mulct the public. It is not the concern of the courts to pass upon the economic advantages or disadvantages of particular acts of legislation. Such matters are for the legislature to determine. They come within the purview of the state's police power. The only function of the court is to determine whether the object of the legislative enactment is within the power of the legislature, and, if so, whether the statute bears a reasonable and substantial relation to the object sought to be accomplished and is not arbitrary or discriminatory. If the answer is in the affirmative, the requirement of due process is met. This principle has been announced by the Supreme Court of the United States in this language: ‘ But there can be no doubt that upon proper occasion and by appropriate measures the state may regulate a business in any of its aspects, including the prices to be charged for the products or commodities it sells. 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. ‘ Whether the free operation of the normal laws of competition is a wise and wholesome rule for trade and commerce is an economic question which this court need not consider or determine.’ Northern Securities Co. v. United States, 193 U.S. 197, 337, 338, 24 S.Ct. 436, 457, 48 L.Ed. 679. And it is equally clear that if the legislative policy be to curb unrestrained and harmful competition by measures which are not arbitrary or discriminatory it does not lie with the courts to determine that the rule is unwise. With the wisdom of the policy adopted, with the adequacy or practicability of the law enacted to forward it, the courts are both incompetent and unauthorized to deal.' Nebbia v. New York, 291 U.S. 502, 537, 54 S.Ct. 505, 516, 78 L.Ed. 940, 89 A.L.R. 1469.

Laws prohibiting sales at less than cost have been held unconstitutional by some courts. State v Packard-Bamberger & Co., Inc., 123 N.J.L. 180, 8 A.2d 291; Commonwealth v. Zasloff, 338 Pa. 457, 13 A.2d 67, 70. The New Jersey and Pennsylvania laws which were held unconstitutional in these cases prohibited such sales and differed in that respect from our law which only operates upon such sales when made with intent to injure a competitor or suppress competition. In Daniel Loughran Co., Inc., v. Lord Baltimore Candy & Tobacco Co., Inc., Md., 12 A.2d 201, 203, a penal law of Maryland, somewhat similar in its terms to our own, was held unconstitutional, principally upon the ground that it established no sufficiently definite criterion for determining the cost at which an article might be sold. See also Great Atlantic & Pacific Tea Co. v. Ervin, D.C., 23 F.Supp. 70, 76, where a statute of the State of Minnesota was held unconstitutional by the federal District Court for that district upon grounds not involving the...