Hirsch v. City and County of San Francisco

• Decision Date: 23 July 1956
• Parties: Louis HIRSCH and Charles Maroosis, Individually and doing business as Tower of Jewels, et al., Plaintiffs-Appellants, v. CITY AND COUNTY OF SAN FRANCISCO, a municipal corporation, et al., Defendants-Respondents. Civ. 16747.
• Court: California Court of Appeals Court of Appeals

Page 177

300 P.2d 177

143 Cal.App.2d 313

Louis HIRSCH and Charles Maroosis, Individually and doing business as Tower of Jewels, et al., Plaintiffs-Appellants, v. CITY AND COUNTY OF SAN FRANCISCO, a municipal corporation, et al., Defendants-Respondents.

Civ. 16747.

District Court of Appeal, First District, Division 2, California.

July 23, 1956.

Morris M. Grupp, Sidney Feinberg, San Francisco, for appellants.

Dion R. Holm, City Atty., City & County of San Francisco, George P. Agnost, Deputy City Atty., San Francisco, for respondents.

NOURSE, Presiding Justice.

This is an appeal by plaintiffs from an order refusing to grant a preliminary injunction and dissolving a temporary restraining order restraining respondents from enforcing an ordinance of the City and County regulating sales by public outcry.

The ordinance, sections 1200 to 1214 of the Police Code of the City and County, contains in substance the following main provisions discussed by the parties: It prohibits the sale etc. 'by public outcry addressed collectively to a group of three or more persons assembled for the purpose of conducting sales' of certain enumerated articles (jewelry, leather goods, etc.) in stores without first obtaining a permit from the Chief of Police, and prohibits such sales completely in the streets. (§ 1200) Requirements for a permit include an application fee of $150, a verified application to be published both in a newspaper and on the premises for which a permit is sought, a bond of $10,000 for the indemnification of loss caused by misrepresentation or breach of warranty, a certification of good moral character and reputation by three residents. The permit shall be denied if the applicant is found to have a prior record of committing a felony or of obtaining money by false pretenses, of embezzlement or of violating an ordinance concerning sale by public outcry (§ 1201). The Chief of Police may issue the permit after investigating these requirements, but not to any applicant not of good character, good reputation and moral integrity, nor if the proposed business site violates a zoning ordinance. Prior violation of the regulation of merchandising by public outcry is a discretionary ground for refusal (§ 1202). The permittee must maintain an inventory of his stock with itemization of cost price, and must make quarterly sworn reports of them to the Chief of Police (§ 1205). The permittee must pay an annual license fee of $150 (§ 1209). Each employee engaged in merchandising by public outcry must have a permit and file a bond like the one of the permittee (§ 1210). The definition of merchandising by public outcry includes in it 'selling, exposing for sale, offering for sale, or soliciting purchasers by means of audible solicitation addressed collectively to a group of three (3) or more persons,' assembled for the merchandising of any of the enumerated articles (§ 1212).

Respondents contend that because the appeal is from a denial of provisional injunctive relief, as to which the trial court has a wide discretion involving the balancing of the respective equities of the parties, the discretionary denial can be upheld without reaching the constitutionality of the ordinance, which constitutes the main point in dispute between the parties. It is true that a decision on the provisional injunctive relief will often be given without determination of the constitutional merits in advance of the trial, French Art Cleaners v. State Board, etc., Cleaners, 91 Cal.App.2d 890, 897, 206 P.2d 25, but such is not an inflexible rule. Bomberger v. McKelvey, 35 Cal.2d 607, 612, 220 P.2d 729. In this case plaintiffs in their verified complaint alleged over and above grounds for invalidity of the ordinance grounds why the enforcement of the ordinance would result in irreparable injury to the business and property rights of plaintiffs. Respondents in their Affidavit in Opposition to Application of Plaintiffs for a Preliminary Injunction did not deny appellants' allegations with respect to said irreparable injury and did not allege any grounds for the urgency of the enforcement of the ordinance but restricted their opposition to defending the validity of the ordinance. The extensive briefs on which the matter was decided in the first instance related to that point only and respondents stated in their brief: '* * * the sole issue before the Court at this time is the constitutionality of the described ordinance.' On an application for a temporary injunction such allegations of the complaint when undenied are to be taken as true by the trial court and the same will then apply on appeal. Kold Kist, Inc., v. Amalgamated Meat Cutters, 99 Cal.App.2d 191, 196, 221 P.2d 724. No issue was joined as to any equities except the validity or invalidity of the ordinance and the denial of the preliminary injunction can in this case only be upheld on the ground that no sufficiently strong showing of the invalidity of the ordinance was made to justify the granting of a preliminary injunction. Evidently, even when irreparable injury from the enforcement of an ordinance is undisputed no preliminary injunction of such enforcement may issue unless plaintiffs' showing raises a strong doubt as to the validity of the ordinance. 43 C.J.S., Injunctions, § 119, p. 657. We have concluded that the grounds urged on this appeal for the invalidity of the ordinance are without merit and that therefore the order appealed from must be affirmed. Our holdings as to the different proposed grounds of unconstitutionality treated herein will be binding also as to the same points on the merits, unless different circumstances are then involved.

Appellants first contend that the ordinance is violative of due process and not a valid exercise of the municipal police power because no need of such enactment is shown, because it is not in the public interest as there are only three businesses in the city to which the ordinance would apply and because the ordinance is unreasonable.

It is undisputed that in general under the police power business may be regulated in a reasonable manner in aid of public safety, health, morals and welfare. The prevention of fraud, cheating and imposition is within said power. Hart v. City of Beverly Hills, 11 Cal.2d 343, 345, 349, 79 P.2d 1080; 11 Cal.Jur.2d 561, 552. In the cited case our Supreme Court upheld on that basis the regulation of auction sales. To the same effect In re West, 75 Cal.App. 591, 243 P. 55; In re Bruce, 54 Cal.App. 280, 201 P. 789. In Mann's Jewelers v. City of San Diego, 140 Cal.App.2d 578, 295 P.2d 468, 470, it was held that sale by outcry defined in the same manner as in the ordinance attacked herein, 'contains practically all of the incidents of an auction sale except the factor of competitive bidding, and that it involves practically all, if not all, of the evils, abuses and potential interference with the peace and general welfare of the public which is found in connection with auction sales and which justifies their regulation. The merchandising technique here is similar and involves the assemblage of persons in a crowd, the resultant limited opportunity for an examination of the goods offered for sale, the restricted opportunity to reflect on the representations made as to the quality and worth of the article, the absence of individual negotiation, and the opportunity for practicing frauds and deceits on the buying public.' The validity of the ordinance amending an 'auction sale ordinance' so as to define 'auction sale' in accordance with the definition of sale by public outcry as contained in our ordinance was upheld. The Supreme Court denied a hearing. It follows that sales by public outcry are under the police power subject to reasonable regulation tending to prevent fraud. Specification in the ordinance of the need for protection against a specific evil and the intention to provide said protection are not required as both will be presumed from the enactment of the ordinance. Hart v. City of Beverly Hills supra, 11 Cal.2d at page 348, 79 P.2d 1080; In re Maki, 56 Cal.App.2d 635, 640, 133 P.2d 64; 11 Am.Jur. 820. The small number of firms allegedly subject to the regulation is irrelevant as to the question whether the regulation serves the public interest as required for the exercise of the police power. Binford v. Boyd, 178 Cal. 458, 461, 174 P. 56. The decisive point is that the ordinance serves to protect the numerous buying public against fraud, and does not serve a private interest only.

With respect to the review of the reasonableness of legislation under the police power it has been said: 'Primarily, in the enactment of a statute the question of its reasonableness is one for prior legislative determination, and ordinarily the legislative conclusion in that respect is regarded as final. It will be disturbed by a contrary judicial conclusion in that regard only when the questioned legislation is so manifestly unnecessary for the promotion or the preservation of the public welfare that the tribunal charged with the duty of adjudicating the matter may fittingly declare that no rational ground existed as a reason for its enactment.' Southern Pac. Co. v. Railroad Comm., 13 Cal.2d 89, 121, 87 P.2d 1055, 1071; 11 Cal.Jur.2d 581-582. The same rule applies to the review of the reasonableness of municipal ordinances under the police power. Ex parte Quong Wo, 161 Cal. 220, 233, 118 P. 714. It must be noted as to this point that with respect to the regulation of the related subject matter of auction sales, In re West, supra, 75 Cal.App. 591, 243 P. 55 upholds an ordinance which completely forbids the retail sale at auction of jewelry except for the bona fide liquidation of stock by a merchant retiring from business, judicial sales, sales by executors and such, a decision which shows clearly that for the purpose of preventing fraud in this field very rigorous regulation is not unreasonable.

We cannot say that the requirement...