People v. Victor

• Decision Date: 02 February 1939
• Docket Number: No. 101.,101.
• Citation: 283 N.W. 666,287 Mich. 506
• Parties: PEOPLE v. VICTOR.
• Court: Michigan Supreme Court

287 Mich. 506

283 N.W. 666

PEOPLE

v.VICTOR.

No. 101.

Supreme Court of Michigan.

Feb. 2, 1939.

Harry Victor was convicted of a violation of Public Act 1937, No. 282, § 6, prohibiting the giving away of a commodity by dealers in bakery and petroleum products to promote the sale of another commodity, and he appeals.

Reversed and defendant discharged.

McALLISTER and POTTER, JJ., dissenting.Appeal from Recorder's Court of Detroit, No. A-15254; John J. Maher, judge.

Argued before the Entire Bench, except BUSHNELL, J.

Percy J. Donovan, of Detroit, for appellant.

Raymond W. Starr, Atty. Gen., and Duncan C. McCrea, Pros. Atty., and William L. Brunner, Asher L. Cornelius, and Paul B. Mayrand, Asst. Pros. Attys., all of Detroit, for the People.

Goodenough, Voorhies, Long & Ryan, of Detroit, amici curiae.

BUTZEL, Chief Justice.

Defendant, an independent dealer operating a gasoline station in the city of Detroit, was convicted of violation of Act No. 282 Pub. Acts 1937. The particular offense charged was that on the sale of five gallons of gasoline at 18.6 cents per gallon, a price at least equal to that generally prevailing, he gave away, as a premium to a cash customer, a drinking glass worth less than five cents, with the intention of injuring or destroying his competitors.

Act No. 282, Pub. Acts of 1937, is entitled: ‘An Act to prevent unfair discrimination, unfair methods of competition and destructive trade practices in the production, manufacture, distribution or sale of bakery products or petroleum products; to provide civil remedies and proceedings for the enforcement of this act; to define the duties of the attorney general with regard thereto; and to provide penalties for the violation of this act.’

Section 6 of the act provides: ‘Any person, doing business in this state and engaged in the production, manufacture, distribution or sale of bakery products or petroleum products, who shall, with the intent to injure or destroy a competitor, give, offer to give or advertise the intent to give away any commodity for the purpose of promoting the sale of any other commodity, shall be deemed guilty of a destructive trade practice, which is hereby prohibited and declared to be unlawful.’

At the trial, it was shown by the prosecution that defendant had issued circulars advertising the giving of a premium, and that the regular customers of some other dealers had made purchases from defendant in order to secure premiums; that the market for the sale of gasoline at retail is a limited one so that only an amount certain is sold; that the giving of a premium, while amounting to a reduction in the retail price, does not result in an increase in the total amount of gasoline consumed; and that an increase of business at one station results in a loss of business by competing stations, with consequent injury to the latter.

Defendant testified that he purchased the gasoline of the specifications he required at the lowest price for which he could obtain it and from whatever source he could secure it on the open market. It was shown that he did not have the benefit of the wide advertising enjoyed by the dealers in nationally known brands, who, by means of radio, magazines and newspapers, claimed superior merit for their products; and that in order to offset such advantages, he gave away premiums. Attention was called to the fact that large stations handling well known brands provide rest rooms with modern facilities, and furnish, without charge, the services of attendants who clean customers' windshields, fill radiators and batteries with water and tires with air, thus giving them, at some expense, something in addition to gasoline for the price of the latter. Defendant testified that he gave premiums solely for the purpose of promoting sales in order to make a livelihood and that he had no intention of injuring or destroying a competitor.

Defendant moved that the information be quashed and also that a verdict of not guilty be directed on the grounds that the act was unconstitutional, and that the intent to injure or destroy a competitor had not been proved beyond a reasonable doubt. The judge, who tried the case without a jury, denied the motion and found defendant guilty. The latter appeals.

While it is the province of the jury, or the judge acting as a jury, to determine the intent from all of the surrounding facts, can it be said from the evidence that the giving away of a glass worth less than five cents, under the circumstances, shows beyond a reasonable doubt an intent to injure or destroy a competitor? Merely to ask the question almost calls for the answer, ‘No,’ but we prefer to base our opinion on broader grounds inasmuch as other cases have arisen throughout the State and a determination of the constitutionality of this section of the law is highly desirable.

Defendant assails the constitutionality of § 6 of the act, under which he was convicted, and also the constitutionality of the act as a whole. We are mindful of the fact that the constitutionality of an act will be presumed until the contrary is shown, and that an entire statute will not be declared unconstitutional because one part is void, if the balance of the act will be effective. The act itself contains a severability clause so often found in recent legislative enactments. We shall, therefore, but briefly refer to the nature of the statute as a whole and limit our main discussion to § 6.

While the purpose of the act may be to prevent the creation of a monopoly by one dealer who seeks to drive out all of his competitors by means of unfair and ruinous competitive practices, to the detriment of the public, nevertheless, the act does savor of an attempt to stiflc competition by maintaining the prices and profits of those dealers already in the business. Defendant claims that the act is a price-fixing measure and relies on Williams v. Standard Oil Co., 278 U.S. 235, 49 S.Ct. 115, 73 L.Ed. 287, 60 A.L.R. 596, which held that the business of selling gasoline was not affected with a public interest so as to permit statutory regulation of retail prices. The prosecution contends, on the other hand, that the statute is not a price-fixing measure, but merely prohibits certain unfair trade practices. In view of our decision as to the validity of § 6, it is unnecessary to decide the question, and in our discussion of that section, we shall assume that the act is not a price-fixing measure, but is solely prohibitive of allegedly unfair trade practices, as contended by the prosecution.

Defendant claims that § 6 of Act No. 282, Pub.Acts 1937, is unconstitutional because it results in a deprivation of property and liberty without due process of law, the prohibition of the giving of premiums being outside of the police power.

The right to engage in any business not harmful to the public is guaranteed by the Constitution. Carolene Products Co. v. Thomson, 276 Mich. 172, 267 N.W. 608. Consequently, if the giving of a premium with the sale of gasoline is a legitmate business practice, with no detrimental effects to the public health, morals, safety and general welfare, the practice may not be prohibited by the legislature and a statute doing so results in a deprivation of property and liberty without due process of law. On the other hand, it is clear that any business or business practice may be regulated if such regulation is necessary to the public welfare, health, morals and safety. Carolene Products Co. v. Thomson, supra; Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, 89 A.L.R. 1469;Great Atlantic & Pacific Tea Co. v. Grosjean, 301 U.S. 412, 414, 57 S.Ct. 772, 81 L.Ed. 1193, 112 A.L.R. 293.

Many cases have held that the giving of premiums or trading stamps with the purchase of commodities is a legitimate business practice which is protected by the due process clause. Long v. State, 74 Md. 565, 22 A. 4,12 L.R.A. 425, 28 Am.St.Rep. 268;In re Opinion of the Justices, 208 Mass. 607, 94 N.E. 848;People v. Gillson, 109 N.Y. 389, 17 N.E. 343,4 Am.St.Rep. 465;State v. Caspare, 115 Md. 7, 80 A. 606;State v. Dalton, 22 R.I. 77, 46 A. 234, 48 L.R.A.,N.S., 775, 84 Am.St.Rep. 818;State v. Ramseyer, 73 N.H. 31, 58 A. 958,6 Ann.Cas. 445;State v. Lothrops-Farnham Co., 84 N.H. 322, 150 A. 551;State v. Dodge, 76 Vt. 197, 56 A. 983, 1 Ann.Cas. 47;O'Keeffe v. City of Somerville, 190 Mass. 110, 76 N.E. 457,112 Am.St.Rep. 316,5 Ann.Cas. 684;In re Opinion of Justices, 226 Mass. 613, 115 N.E. 978;State v. Sperry & Hutchinson Co., 110 Minn. 378, 126 N.W. 120, 30 L.R.A.,N.S., 966; Ex parte McKenna, 126 Cal. 429, 58 P. 916; Ex parte Drexel, 147 Cal. 763, 82 P. 429, 2 L.R.A.,N.S., 588, 3 Ann.Cas. 878;Denver v. Frueauff, 39 Colo. 20, 88 P. 389, 7 L.R.A.,N.S., 1131, 12 Ann.Cas. 521;Denver v. United Cigar Stores Co., 68 Colo. 363, 189 P. 848;United Cigar Stores Co. v. People, 68 Colo. 546, 190 P. 1117;Young v. Com., 101 Va. 853, 45 S.E. 327;City Council of Montgomery v. Kelly, 142 Ala. 552, 38 So. 67,70 L.R.A. 209, 110 Am.St.Rep. 43;State v. Sperry & Hutchinson Co., 94 Neb. 785, 144 N.W. 795, 49 L.R.A., N.S., 1123; Sperry & Hutchinson v. City of Owensboro, 151 Ky. 389, 151 S.W. 932, Ann.Cas.1915A, 373;People v. Zimmerman, 102 App.Div. 103, 92 N.Y.S. 497;People v. Dycker, 72 App.Div. 308, 76 N.Y.S. 111. However, the Supreme Court of the United States has held that the giving of premiums or trading stamps with the purchase of merchandise is subject to prohibition by the legislature under the police power. Rast v. Van Deman & Lewis Co., 240 U.S. 342, 36 S.Ct. 370, 60 L.Ed. 679, L.R.A.1917A, 421, Ann.Cas.1917B, 455;Tanner v. Little, 240 U.S. 369, 36 S.Ct. 379, 60 L.Ed. 691;Pitney v. Washington, 240 U.S. 387, 36 S.Ct. 385, 387,60 L.Ed. 703. In the case of People v. Sperry & Hutchinson Co., 197 Mich. 532, 164 N.W. 503, L.R.A.1918A, 797, quo warranto proceedings were brought to oust the defendant trading stamp company from doing business in Michigan in violation of the provisions of ...