State ex rel. Anderson v. Fleming Co., 41304

• Decision Date: 16 May 1959
• Docket Number: No. 41304,41304
• Citation: 339 P.2d 12,184 Kan. 674
• Parties: STATE of Kansas ex rel. John ANDERSON, Jr., Attorney General of the State of Kansas, Appellant, v. FLEMING COMPANY, Inc., Beatrice Foods Company, Foremost Food and Chemical Company, Adams Dairy Company, Fairmount Foods Company, and Edward G. Johnston, Appellees.
• Court: Kansas Supreme Court

Page 12

339 P.2d 12

184 Kan. 674

STATE of Kansas ex rel. John ANDERSON, Jr., Attorney General of the State of Kansas, Appellant, v. FLEMING COMPANY, Inc., Beatrice Foods Company, Foremost Food and Chemical Company, Adams Dairy Company Fairmount Foods Company, and Edward G Johnston, Appellees.

No. 41304.

Supreme Court of Kansas.

May 16, 1959.

Rehearing Denied June 17, 1959.

Syllabus by the Court

1. In a suit to enjoin defendants from violating the provisions of G.S.1957 Supp. 50-503(l) and (m) in selling milk at less than cost at the point of delivery, the subsections involved are examined and it is held: A criminal statute, which neither requires a criminal intent in doing the proscribed act or defines with exactness the act forbidden, and further is indefinite as to exceptions as to liability, denies due process to one against whom the statute is asserted; and this is true although the statute be attempted to be enforced in a suit for injunction and not in a criminal action.

2. Where a statute contains a provision that the invalidity of any section shall not render the entire act invalid and only parts of one section of the statute are involved in the suit before the court and found to be unconstitutional, the court erred in holding the entire statute invalid.

George B. Powers and Gerald Sawatzky, Sp. Asst. Attys. Gen., John Anderson, Jr., Atty. Gen. and Charles N. Henson, Jr., Asst. Atty. Gen., on the briefs, for appellant.

John J. Hasburgh, Jr., Kansas City, Mo., and James W. Porter, Topeka, Melvin J. Spencer and Robert I. Donnellan, Kansas

City, Mo., on the briefs, for appellee Adams Dairy Co.

Charles F. Lamkin, Jr., Kansas City, Mo., and Lester M. Goodell, Topeka, and Norman E. Greene, Kansas City, Mo., on the brief, for appellee Foremost Food & Chemical Co.

Jacob A. Dickinson, Topeka, Roy P. Swanson and Robert M. Duboc, Kansas City, Mo., and E. R. Schaberg, Omaha, Neb., of counsel, for appellee Fairmount Foods Co.

Robert L. Webb, Ralph W. Oman, Robert A. McClure, Philip E. Buzick, and James D. Waugh, Topeka, for appellee Fleming Co., Inc.

Clayton E. Kline, M. F. Cosgrove, Robert E. Russell, Willard N. Van Slyck, Jr., William B. McElhenny, O. R. Stites, Jr., and James L. Grimes, Jr., Topeka, for appellee Beatrice Foods Co.

W. A. Kahrs, Wichita, for Kansas Ice Cream & Milk Institute, Steffens Dairy Foods Co., Inc., Hyde Park Dairies, Inc. and Armstrong Creamery Co., amicus curiae.

Richard L. Becker and Morris D. Hildreth, Coffeyville, for Bennett Ice Cream Co., Gardiner Dairy & Ice Cream Co., Hoch Dairy, Lawrence Sanitary Milk & Ice Cream Co., Inc., and Page Milk Co., amici curiae.

JACKSON, Justice.

This is an appeal involving an injunction suit brought by the attorney general under the provisoins of G.S.1957 Supp. Chapter 50, Article 5, against the defendant-appellees. The aforementioned article 5 constitutes the provisions of Laws of 1957, Chapter 309, in which the legislature attempted to make a number of things unlawful when done by a distributor, processor, or wholesaler of dairy products. In a certain sense, the act is an unfair trade practice act (cf. G.S.1949, ch. 50, art. 4) dealing only with dairy products and the sale thereof. The district court held the new act entirely unconstitutional and the plaintiff has appealed.

In the suit below, appellant filed his petition against the appellees alleging that each of them had violated the provisions of G.S.1957 Supp. 50-503(l) and (m). Without detailing the amendments of the petition, it will be sufficient to state that certain defendants named in the original petition who were retailers were dropped from the pleading, and we are now concerned with the second amended petition. This pleading charges that all of the appellees sold milk to certain grocery stores at fourteen and one-half cents per half gallon and in the case of Adams Dairy Company at the price of thirteen and one-half cents per half gallon; that such conduct constituted a violation of the statute and appellant sought an injunction against the appellees (see section 50-505). The appellees demurred to the second amended petition and after due consideration by the trial court, the demurrers were sustained on the ground that the statute was unconstitutional.

Other matters in the trial court need not be noted here and we shall proceed to consider the constitutionality of the new act attempting to regulate the dairy industry.

It will be noted first that the act begins in section 50-501 with a statement that certain practices are current in the dairy industry and adversely affect the stable economy of the state. This section constitutes a statement of the purposes of the act and reads as follows:

'The practices being conducted by many dairy processors, wholesalers, and distributors in Kansas of selling below cost and in the subsidization of retail dealers through secret discounts, gifts, loans and other means and the furnishing of equipment, adversely affect the stable economy of Kansas. Such trade conduct causes unfair price discrimination, destructive and predatory trade practices, tends to reduce the price paid to the dairy farmer, increases the price paid by the consumer, and misleads the public as to the true value of dairy products, and is detrimental to the public health and welfare.'

Section 50-502 of the act contains definitions. The most important in this case are the definitions of 'distributor,' 'processor,' and 'wholesaler.' It may be noted in passing that under these definitions, a dairyman owning a herd of milk cows and a pasteurizing plant and delivering most of his milk to his own customers at their homes would still fall within the terms 'distributor,' 'processor,' and 'wholesaler' if he at the same time sold some of his milk to the corner grocery store for resale. The court takes notice that there are some such dairies even in Shawnee County.

In section 50-503, the first paragraph reads as follows:

'It shall be unlawful for any person engaged in business as a wholesaler, processor, or distributor, individually or through or by affiliates, subsidiaries, associates, agents or stockholders, directly or indirectly, to do or cause to be done any of the following acts:'

Following this are enumerated a great number of prohibited acts, most of which seem to forbid the granting of concessions to retailers. Only the two subparagraphs hereinafter set out are involved in this suit and they read as follows:

'(l) Sell any products, unit or combination thereof, for less than cost to the wholesaler, processor or distributor at the point of delivery; or sell to any retail dealer any expendable supplies for less than cost to any such wholesaler, processor or distributor at the point of delivery plus a markup of six percent (6%) of such cost as a proportionate share of the cost of doing business; except a person may sell either such dairy products or expendable supplies at prices made in good faith to meet existing lawful competition. Competent evidence of the prevailing cost to other such wholesalers, processors, or distributors engaged in selling dairy products on the same market shall constitute prima facie evidence of the cost to any person charged with violation of this provision.

'(m) Grant, either directly or indirectly, to any retail dealer any secret discount, make any rebate, or permit any deviation from the price at which he furnishes dairy products of the same quality, brand and quantity to other retail dealers in the same city, unincorporated town, or immediate vicinity thereof, except that deviations from such prices may be given when made in good faith to meet existing lawful competition: Provided, however, that bids, deviating from such prices, made pursuant to invitations issued by federal institutions or installations, may be filed, and contracts entered into, and fulfilled, without being deemed in violation of the provisions of this subsection. The terms 'made in good faith' and 'lawful' as used in this and the preceding subsection shall mean 'in conformity with and not in conflict with nor contrary to, any law of this state or of the United States of America.''

We need not refer to the other sections of the statute at this time.

In the lower court and here, the appellees contend that the statute under consideration is unconstitutional under the Fourteenth Amendment to the Constitution of the United States and Sections 1, 10 and 18 of the Bill of Rights of the Constitution of Kansas. The trial court in the finding that the above quoted sections were unconstitutional seems to have held that the legislature would patently not have enacted the statute without those sections and that therefore, the entire statute was unconstitutional.

It must be established beyond question that the legislature has power to regulate and provide for the accomplishment of the purposes set forth in section 50-501. Not only have monopolies and trusts been the subject of legislation for more than half a century, but the dairy industry has been regulated for the purpose of protecting the public health and welfare more completely than any other industry. We shall not pause to cite cases upon this proposition. The real question here, we believe, comes down to the matter well stated by the Supreme Court of the United States in the case of Nebbia v. People of State of New York, 291 U.S. 502, 54 S.Ct. 505, 510, 78 L.Ed. 940, 89 A.L.R. 1469, in which the court said:

'The Fifth Amendment, in the field of federal activity, and the Fourteenth, as respects state action, do not prohibit governmental regulation for the public welfare. They merely condition the exertion of the admitted power, by securing that the end shall be accomplished by methods consistent with due process. And the guaranty of due process, as has often been held, demands only that the law shall not be unreasonable, arbitrary, or capricious, and that the means selected shall have a real and substantial relation...