Neeld v. Automotive Products Credit Ass'n, 18194

• Decision Date: 24 March 1952
• Docket Number: No. 18194,18194
• Citation: 21 N.J.Super. 159,90 A.2d 558
• Parties: NEELD, Deputy Director, Division of Taxation, Department of Treasury, v. AUTOMOTIVE PRODUCTS CREDIT ASS'N.
• Court: New Jersey District Court

Page 159

21 N.J.Super. 159

90 A.2d 558

NEELD, Deputy Director, Division of Taxation, Department of Treasury, v. AUTOMOTIVE PRODUCTS CREDIT ASS'N.

No. 18194.

District Court, Union County New Jersey.

March 24, 1952.

Theodore D. Parsons, Atty. Gen., by Henry W. Eckel, Jr., Washington, for the plaintiff.

Stein & Stein, by Samuel Stein, Jersey City, for the defendant.

FULOP, J.D.C.

The Deputy Director of the Division of Taxation, Department of the Treasury of the State of New Jersey, brings this action to recover a penalty under the provisions of R.S. 56:6--2(b), N.J.S.A., and R.S. 56:6--3, N.J.S.A. It charges that defendant has, during a designated period, sold motor fuel at a price below the net cost to it plus all selling expenses, in violation of the statute.

The facts are stipulated. They include an audit report of defendant's operation for the period beginning at 3 P.M. on June 25, 1951, and ending at 7 A.M. on July 2, 1951. The report shows that it took the auditors three full days, July 2, 1951 to July 5, 1951, to make the audit for the brief period involved. It reveals that defendant sells two kinds of gasoline and oil. Every item was sold for more than the purchase price thereof. However, the gross profit realized on the gasoline was less than the allocated share of the cost of operating the business.

R.S. 56:6--2(b), N.J.S.A. provides:

'(b) No retail dealer shall sell motor fuel at a price which is below the net cost of such motor fuel to the retail dealer plus all selling expenses.'

If the allocation of the cost of operating the business is correct, then the defendant violated the statute by selling motor fuel below the net cost plus all selling expenses.

These are the only facts before me.

Defendant asserts two defenses:

1. That R.S. 56:6--2(b), N.J.S.A. is unconstitutional because it unlawfully interferes with the right of defendant to engage in a lawful business.

2. That the statute is unconstitutional because it is too indefinite to be enforceable.

As to the Propriety of Passing on Constitutional Questions.

Neither party has raised any question as to the propriety of passing upon the constitutionality of a statute in a district court, which is an inferior court of limited jurisdiction.

In Legg v. County of Passaic, 122 N.J.L. 100, 4 A.2d 300, 302 (Sup.Ct.1939), Mr. Justice Parker quoted with approval from an opinion of Judge Dungan, that "the better practice is for the inferior court to assume that an act is constitutional until it has been passed upon by the Appellate Court, unless it is so clearly in contravention of the constitution that there can be no reasonable doubt about it * * *"

That view was reaffirmed 'as the guide for courts of inferior jurisdiction' in State on Complaint of Lief v. Packard-Bamberger & Co., 123 N.J.L. 180, 8 A.2d 291, 292 (Sup.Ct.1939).

It is clear that it is not the function of this court to pioneer in the field of constitutional law. The presumption of constitutionality must be applied with greater force here than in the appellate courts. The pattern of the law must be drawn by the appellate courts. The trial courts, especially those of limited jurisdiction, must follow, not lead.

Nevertheless, the issues presented must be determined. There must be a conviction or an acquittal. I cannot conceive it to be my duty to convict when an acquittal is indicated on the theory that the question should be settled on appeal. Even a policeman must construe the Constitution in the performance of his duty.

The Right to Fix Prices.

In State on Complaint of Lief v. Packard-Bamberger & Co., 123 N.J.L. 180, 8 A.2d 291 (Sup.Ct.1939), a price-fixing statute very similar to the one here under consideration was held invalid. It applied to all merchandise. One of the two grounds upon which the court based its decision was that the regulation of prices of merchandise not affected with a public interest was prohibited without relation to injurious effect in stifling competition.

The case is exactly in point. But for the passage of time and subsequent decisions, no further discussion would be in order.

The statute in our case deals with a commodity not affected with a public interest, except as a fire hazard. Reingold v. Harper, 6 N.J. 182, 78 A.2d 54 (1951).

The statute under consideration states no objective. It does not require proof that the selling below cost was intended to or might have the effect of stifling competition. The liability is absolute. All selling below cost is prohibited.

In Regal Oil Co. v. State, 123 N.J.L. 456, 10 A.2d 495 (Sup.Ct.1939), another section of the same statute (L.1938, c. 163, as amended, L.1939, c. 62), was declared unconstitutional. That was the section now designated R.S. 56:6--2(d), N.J.S.A. which regulates the advertising of the price. The court held that the regulation of the advertising of the price of gasoline had no substantial relation to the public welfare and did not justify the exercise of the police power.

The cost to the dealer has little bearing on the competitive effect of his price. A large refiner may sell at retail for a price much lower than a dealer who must buy from the refiner in small quantities. A large retailer may be able to buy in quantity for less than an individual dealer.

The effect is discriminatory. The means of fair and unfair competition are left open to the refiner and large dealer, while the individual dealer is barred by law from competing.

In Lane Distributors v. Tilton, 7 N.J. 349, 81 A.2d 786, 795 (1951) the Unfair Cigarette Sales Act was held invalid. The court reviewed the recent cases on price-fixing. It concluded that a statute which controls prices at which commodities may be sold is not Per se...