Mott's Super Markets, Inc. v. Frassinelli

• Decision Date: 06 April 1961
• Citation: 148 Conn. 481,172 A.2d 381
• Court: Connecticut Supreme Court
• Parties: MOTT'S SUPER MARKETS, INC. v. Attilio R. FRASSINELLI, Commissioner of Consumer Protection. Supreme Court of Errors of Connecticut

Page 381

172 A.2d 381

148 Conn. 481

MOTT'S SUPER MARKETS, INC. v. Attilio R. FRASSINELLI, Commissioner of Consumer Protection.

Supreme Court of Errors of Connecticut.

April 6, 1961.

Joseph P. Cooney, Hartford, with whom were Patrick J. Flaherty, Hartford, and, on the brief, Henry F. Cooney and John F. Scully, Hartford, for appellant (plaintiff).

Michael J. Scanlon, Asst. Atty. Gen., with whom, on the brief, was Albert L. Coles, Atty. Gen., for appellee (defendant).

Before BALDWIN, C. J., KING, MURPHY and SHEA, JJ., and ALCORN, Superior Court Judge.

BALDWIN, Chief Justice.

The plaintiff has appealed from a judgment of the Court of Common Pleas which sustained the commissioner of consumer protection, the defendant, in issuing an order, pursuant to § 42-112 of the General Statutes, that the plaintiff cease and desist from advertising and selling in its supermarkets two products, both well-known brands, at less than 'cost to the retailer' as defined in General Statutes, § 42-111.

The legislation under consideration is chapter 736 of the General Statutes, as amended, entitled 'Unfair Sales Practices.' Section 42-112 contains, in summary, the following provisions: Whenever the commissioner of consumer protection has reason to believe that any person has violated any provision of the chapter, or whenever proper evidence of any violation has been presented to him, and it appears to him that a proceeding in respect thereto is in the public interest, he shall cause an investigation to be made. If there is satisfactory evidence of an alleged violation, the commissioner shall mail, by certified mail, to the alleged violator a complaint stating the charges and giving notice of a time and place for a hearing before the commissioner. The person against whom complaint is made may appear and show cause why an order should not be entered by the commissioner requiring him to cease and desist from the violation alleged. If, upon the hearing, the commissioner is of the opinion that the method of competition or the act or practice in question is prohibited by the chapter, he shall make a report of his findings of fact and order the violator to cease and desist from using such methods of competition or such practices. Any person who violates the order or any provision of the section shall be fined not less than $25 nor more than $100 for each offense.

Section 42-114 forbids any retailer, as defined in § 42-111, to 'advertise, offer to sell or sell at retail any item of merchandise at less than cost to the retailer,' as that term is defined in § 42-111, 'with intent to injure competitors or destroy competition.' Section 42-114 specifically states that '[e]vidence of any advertisement, offer to sell or sale of any item of merchandise by any retailer * * * at less than cost to him shall be prima facie evidence of intent to injure competitors or destroy competition.' Any person against whom the commissioner has issued an order may obtain a review of it in the Court of Common Pleas. General Statutes § 42-113. The commissioner is required to file with the court a transcript of the entire record of the proceedings before him, including all the evidence, and his report and order. Ibid. The court has the power to affirm, modify or set aside the order and to enforce it, or so much of it as the court sustains. Ibid. The findings of the commissioner as to the facts, if the findings are supported by evidence, shall be conclusive. Ibid. Any violation of the order, as affirmed, is punishable by a fine of not less than $50 nor more than $100 for each sale or advertisement in violation of the law. Ibid. Section 42-115 sets forth the circumstances under which items may be advertised or offered for sale, or sold, below cost and excepts them from the prohibition of the other sections of the chapter.

The commissioner complained against the plaintiff, held a hearing and took testimony. Thereafter, on April 29, 1960, he issued an order that the plaintiff cease and desist from '[a]dvertising and selling' Maxwell House coffee and Duncan Hines cake mixes at less than 'cost to the retailer' and from '[t]he advertising offering to sell or sale of 'loss leaders' as a method of competition.' The finding of the commissioner can be stated briefly as follows: The plaintiff, by its president, admitted the advertising and selling of Maxwell House coffee and Duncan Hines cake mixes at less than 'cost to the retailer.' These items were advertised and sold with the intent of luring customers to the plaintiff's store--a method of operation referred to as the use of 'loss leaders.' The intent of the plaintiff was to entice customers to the store so that they would purchase other items besides those advertised. We quote verbatim from one paragraph of the commissioner's finding, because it is crucial: 'Although the avowed purpose of Mott's advertising the aforementioned items at less than cost to the retailer * * * was to merchandise their products and bring the public into their store, they must have necessarily intended to injure competitors because they admitted a competitor is injured when one or more of the competitors' customers are induced to and in fact do shop at Mott's Super Markets, Inc.'

The court affirmed so much of the commissioner's order as pertained to the advertising and sale of Maxwell House coffee and Duncan Hines cake mixes at less than 'cost to the retailer,' and it enjoined the plaintiff, under penalty of $1000, from violating that part of the order; it set aside the part which pertained to the advertising or sale of 'loss leaders' as a method of competition generally.

The plaintiff, on its appeal to this court, claims (1) that the provision of § 42-114 which makes evidence of any advertisement, offer to sell or sale of any item at less than cost 'prima facie evidence of intent to injure competitors or destroy competition' renders the statute unconstitutional; and (2) that the finding that the plaintiff had the intent of injuring competitors within the prohibition of the statute is unsupported by the evidence. Our Unfair Sales Practices Act, now chapter 736 of the General Statutes, was first adopted in 1939. Cum.Sup.1939, §§ 922e, 923e, 924e; Rev.1949, §§ 6715, 6716, 6717. The language, in what is presently § 42-114, against which the plaintiff directs its attack was contained, in identical wording, in §§ 923e and 6716. The prohibitions of the section originally could be enforced only upon a complaint to the Superior Court, by the person allegedly injured, praying for injunctive relief against the acts complained of. Cum.Sup.1939, § 923e; Rev.1949, § 6716. We considered the constitutionality of the Unfair Sales Practices Act in Carroll v. Schwartz, 1940, 127 Conn. 126, 14 A.2d 754. The question was raised in that case on a demurrer to the complaint. We held (127 Conn. at page 128, 14 A.2d at page 755) that the act was not price fixing legislation and was therefore not violative of the due process provisions of the federal and state constitutions, so far as those provisions operate to prevent price fixing. U.S.Const. amend. XIV § 1; Conn.Const. art. I § 12. We discussed (127 Conn. at page 129, 14 A.2d at page 756) the expressed legislative purpose of the act and concluded (127 Conn. at page 131, 14 A.2d at page 757) that it was a legitimate exercise of the police power of the state. We expressed doubt as to the constitutional validity of the provision relating to prima facie evidence of intent to injure competitors or destroy competition. We held (127 Conn. at page 132, 14 A.2d at page 757), however, that this issue was not before us because the complaint alleged that the acts described were done with intent to injure competitors or destroy competition and that allegation was admitted by the demurrer. We pointed out (127 Conn. at page 128, 14 A.2d at page 755) that the only method of enforcement was by injunction at the instance of the party injured.

In 1955, the General Assembly added a new section to the chapter, thereby instituting the present procedure of a complaint by, and a hearing before, the commissioner. Cum.Sup.1955, § 2869d (General Statutes § 42-112). Another section, § 2870d (General Statutes § 42-113), added at the same time, superseded the statutory provision for a complaint, by the person allegedly injured, to the Superior Court and provided for a review of the commissioner's action by the Court of Common Pleas, which could affirm, modify or set aside the commissioner's order and enforce it, as affirmed, by injunctive procedure. This new section went further and fixed a monetary penalty of not less than $25 nor more than $100 for each violation of the commissioner's order after it had become final. The chapter was again amended in 1959 with respect to procedure and to authorize the imposition of a higher minimum penalty, $50, for each violation of an order of the commissioner which had been reviewed and affirmed, in whole or in part, by the court. Public Acts 1959, No. 284, §§ 2, 3. The case before us is governed by the chapter as amended.

To be constitutionally valid, legislation policing the operation of a legitimate business must serve some phase of the public health, safety, convenience and welfare in a reasonable and impartial way. In exercising police power, the legislature has a broad discretion in passing on the need and fashioning the method. 'The limitation upon this [legislative] discretion is drawn by the courts at that point where the regulatory measures either fail to serve the public good or serve it in a despotic way.' United Interchange, Inc. v. Spellacy, 144 Conn. 647, 654, 136 A.2d 801, 805. The regulations imposed on a lawful business cannot exceed what is reasonably necessary to accomplish their purpose. Leach v. Florkosky, 145 Conn. 490, 495, 144 A.2d 334; State v. Porter, 94 Conn. 639, 645, 110 A. 59.

Proof of an intent to injure competitors or destroy competition has generally been...