People ex rel. Orcutt v. Instantwhip Denver, Inc., 23867

• Decision Date: 22 November 1971
• Docket Number: No. 23867,23867
• Citation: 490 P.2d 940,176 Colo. 396
• Parties: The PEOPLE of the State of Colorado ex rel. John P. ORCUTT, Commissioner of Agriculture, Plaintiff in Error, v. INSTANTWHIP DENVER, INC., a corporation, Defendant in Error.
• Court: Colorado Supreme Court

Page 940

490 P.2d 940

176 Colo. 396

The PEOPLE of the State of Colorado ex rel. John P. ORCUTT Commissioner of Agriculture, Plaintiff in Error, v. INSTANTWHIP DENVER, INC., a corporation, Defendant in Error.

No. 23867.

Supreme Court of Colorado, En Banc.

Nov. 22, 1971.

Duke W. Dunbar, Atty. Gen., John P. Moore, Deputy Atty. Gen., Robert C. Miller, James K. Kreutz, Asst. Attys. Gen., Denver, for plaintiff in error.

Walter F. Scherer, Clarke W. Karr, Denver, for defendant in error.

LEE, Justice.

This writ of error is directed to a judgment of the Denver District Court denying plaintiff's application for a permanent injunction restraining defendant, Instantwhip Denver, Inc., from selling or offering for sale within the state of Colorado 'Instantwhip's Dressing,' 'Jim's Dressing,' and 'Dressing,' food products manufactured by defendant and sold at wholesale to restaurants and institutions such as hospitals. The complaint alleges that the above food products are 'filled dairy products,' the manufacture and sale of which within the state of Colorado is prohibited by C.R.S.1963, 7--6--25 to 7--6--32, known as The Colorado Filled Dairy Products Act. Section 25(2)(a) of the act defines a filled dairy product as follows:

"Filled dairy product' means any milk, cream or skimmed milk, or any combination thereof, whether or not condensed, evaporated, concentrated, frozen, powdered, dried, or dessicated, or any food product made or manufactured therefrom, to which has been added, or which has been blended or compounded with any fat or oil other than milk fat so that the resulting product is in imitation or semblance of any dairy product, including but not limited to milk, cream, sour cream, * * *.'

The act forbids the manufacture, sale and possession of filled dairy products and empowers the department of agriculture and the commissioner of agriculture to enforce the act, authorizes injunctive proceedings, and provides for seizure and disposition of filled dairy products illegally held. The People through the commissioner of agriculture sought to enjoin the further sale of defendant's products and sought to seize and destroy the products in defendant's possession which were then held for sale.

The trial court entered extensive findings of fact and conclusions of law, and denied all relief. We affirm the judgment.

In summary, the findings reflect that 'Instantwhip's Dressing,' 'Jim's Dressing' and 'Dressing' were all manufactured by the same process and contained the same basic ingredients--water, hydrogenated vegetable oil, nonfat dry milk, lactic culture, mono di glycerides, Irish moss and salt. The trade names and ingredients were properly set forth on the labels of the containers in which the products were sold. The products were sold to and used by consumer restaurants and institutions as substitutes for sour cream, as a topping for baked potatoes, and for use in sauces, salad dressings and gravies. They were similar in color, body, texture, odor and flavor to sour cream. Instantwhip's dressings had a usable life of approximately eight weeks, whereas the usable life of sour cream is approximately two and one-half weeks because of a more rapid whey separation.

The process used in manufacturing defendant's products was essentially the same as used in producing sour cream. With one exception the ingredients were the same: milk fat is used in making sour cream, whereas vegetable fat is used in producing the Instantwhip dressings.

The court further found that defendant's products compete not only with sour cream but also with other commercially manufactured substitute sour cream mixes which do not contain dry milk, but which use instead commercially made lactic acid; that defendant could make its product with commercially made lactic acid rather than dry milk; but that defendant claims natural acidification with milk produces a better taste than that produced by the artificial acidification process. In its conclusions, the court observed that by using commercially made lactic acid the defendant could lawfully manufacture and sell its product, as did its competitors who did not use dry milk in their products. (The product would not then come within the filled milk act.)

The court found the ingredients used in defendant's dressings were wholesome and healthful, and the dressings were manufactured in compliance with local and federal health standards. Nutritionally, the only apparent difference between sour cream and defendant's dressings was that sour cream contained vitamin A from its milk fat content, whereas the vegetable fat used in defendant's dressings contained no vitamin A.

Further, the court found that defendant's products were directly sold to restaurants and hospitals and not to grocery markets; that the restaurants which used the products did not advertise sour cream on their menus; that for the most part the product was placed on the customer's table as a topping for potatoes; and in one restaurant where customers requested sour cream, defendant's dressing was served to the customers.

The court concluded there was no fraud being perpetrated by defendant in the sale to the restaurants and hospitals, as the products were clearly labeled as to their contents; the buyers were advised that the product was a dressing that might be used in place of sour cream, mayonnaise or other similar products; and that the buyers knew what they were buying. In only one instance was there any showing that patrons of a restaurant were deceived as to the nature of the product. The court concluded that the consequence for this deception should be borne by the restaurant and not the defendant manufacturer.

The court concluded the Instantwhip products were in fact 'in imitation or semblance' of sour cream and were therefore 'filled dairy products' as defined by the act. However, the court ruled the statute had no relation to the public health, safety and welfare and was an invalid exercise of the police power and therefore unconstitutional as applied to defendant's products. The court further concluded that no fraud was being perpetrated upon the public by the defendant that would justify restraining the defendant from selling its products.

The findings of the trial court were amply supported by the evidence, which the record shows for the most part to be undisputed.

Historically, legislation banning filled milk was first enacted by congress on March 14, 1923. The Federal Filled Milk Act, 21 U.S.C. § 61 et seq., prohibited the shipment in interstate commerce of any filled milk. Subsequently, many states adopted similar legislation which forbade the manufacture and sale of filled milk.

In United States v. Carolene Products Co., 304 U.S. 144, 58 S.Ct. 778, 82 L.Ed. 1234, the Federal Filled Milk Act was sustained against an attack of unconstitutionality as an infringement upon the Fifth Amendment rights of due process of law. The act was sustained on the basis of the legislative history and on congressional findings that filled milk products were nutritionally deficient and resulted in deceptive marketing practices amounting to consumer fraud.

Again in 1944 the act was held to be valid as against the attack that it violated due process of law where the Filled milk product involved was admittedly wholesome. Carolen Products Co. v. United States, 323 U.S. 18, 65 S.Ct. 1, 89 L.Ed. 15. The court held that even though the problem of nutritional deficiencies had been overcome, the evil of product confusion remained and congress could validly exclude filled milk compounds from interstate commerce.

Simultaneously, the court announced Sage Stores v. State of Kansas ex rel. Mitchell, 323 U.S. 32, 65 S.Ct. 9, 89 L.Ed. 25, where the Kansas Filled Milk Act was held not to be in violation of the rights of liberty and property under the due process of law and equal protection clauses of the Fourteenth Amendment. The court decided that the particular product under consideration, although wholesome, was less nutritious than evaporated whole milk and, even though properly labeled, the legislative purpose of preventing fraud and deception was a rational basis upon which to justify prohibition of its manufacture and sale.

Following the federal precedents, state acts were upheld in the exercise of the police power in the following jurisdictions: Aeration Processes v. Commissioner of Public Health, 346 Mass. 546, 194 N.E.2d 838; Poole and C. Market Co. v. Breshears, 343 Mo. 1133, 125 S.W.2d 23; Carolene Products Co. v. Harter, 329 Pa. 49, 197 A. 627, 119 A.L.R. 235; Martin v. Wholesome Dairy, Inc., 437 S.W.2d 586 (Tex.Civ.App.); Reesman v. State, 74 Wash.2d 646, 445 P.2d 1004.

In our opinion, however, more persuasive holdings to the contrary are found in the following decisions where the respective acts were found to be unconstitutional in some or all aspects considered: State v. A. J. Bayless Markets, Inc., 86 Ariz. 193, 342 P.2d 1088; People v. Carolene Products Co., 345 Ill. 166, 177 N.E. 698; Carolene Products Co. v. McLaughlin, 365 Ill. 62, 5 N.E.2d 447; Coffee-Rich, Inc. v. Commissioner of Public Health, 348 Mass. 414, 204 N.E.2d 281; Carolene Products Co. v. Thomson, 276 Mich. 172, 267 N.W. 608; Carolene Products Co. v. Banning, 131 Neb. 429, 268 N.W. 313.

It has many times been said, in a variety of ways, that statutes are presumed to be constitutional and are not to be overthrown as unconstitutional unless shown by clear and convincing considerations to be so beyond a reasonable doubt. Morgan Co....