State v. Fairmont Creamery Co.

• Decision Date: 27 February 1925
• Docket Number: No. 24318.,24318.
• Citation: 162 Minn. 146,202 N.W. 714
• Parties: STATE v. FAIRMONT CREAMERY CO.
• Court: Minnesota Supreme Court

202 N.W. 714

162 Minn. 146

STATE v. FAIRMONT CREAMERY CO.

No. 24318.

Supreme Court of Minnesota.

February 27, 1925.

Case Certified from District Court, Cottonwood County; L. S. Nelson, Judge.

The Fairmont Creamery Company was convicted of discrimination in buying milk, cream, etc., before a justice of the peace, and on denial by district court, on appeal, of motion to quash complaint, the district court certified questions. Affirmed and remanded.

C. L. Hilton, Atty. Gen., Charles E. Phillips, Asst. Atty. Gen., and O. J. Finstad, Co. Atty., of Windom, for the State.

Charles A. Flinn and Wilson Borst, both of Windom, and Leonard A. Flansburg, of Lincoln, Neb., for defendant.

DIBELL, J.

The defendant was convicted before a justice of the peace of Cottonwood county of the violation of Laws 1923, c. 120, now embodied in G. S. 1923, § 3907, reading as follows:

"Any person, firm, co-partnership or corporation engaged in the business of buying milk, cream or butterfat for manufacture or for sale of such milk, cream or butterfat, who shall discriminate between different sections, localities, communities or cities of this state, by purchasing such commodity at a higher price or rate in one locality than is paid for the same commodity by said person, firm, co-partnership or corporation in another locality, after making due allowance for the difference, if any, in the actual cost of transportation from the locality of purchase to the locality of manufacture or locality of sale of such milk, cream or butterfat, shall be deemed guilty of unfair discrimination, and, upon conviction thereof, shall be punished by a fine not exceeding one hundred dollars, or by imprisonment in the county jail for not exceeding 90 days."

An appeal on questions of law and fact was taken to the district court. The defendant there moved to quash the complaint. The motion was denied, and the court certified the following questions:

(1) Whether the venue was properly laid in Cottonwood county.

(2) Whether the statute violates the equality provision of the federal or state Constitution.

(3) Whether it violates the liberty of contract provision of the federal or state Constitution.

(4) Whether it contravenes the Commerce Clause of the federal Constitution.

1. On June 11, 1923, the defendant purchased cream at Mountain Lake and Bingham Lake in Cottonwood county, and at Madelia in Watonwan county. It was shipped to Sioux City, Iowa. The same price was paid at Mountain Lake and Bingham Lake. A higher price was paid at Madelia. The transportation cost from Madelia was greater. Making allowance for the greater cost, the price paid at Madelia was higher than that paid either at Mountain Lake or Bingham Lake by from one to three cents per gallon. The transportation cost, as between Mountain Lake and Bingham Lake, was in favor of the latter, but after making allowance for it the difference in the net price at the two points was but a fraction of a cent per gallon, and perhaps negligible.

The gist of the offense is the discrimination between different localities by paying different prices in different localities after making due allowance for the cost of transportation from the point of purchase to the point of sale or manufacture. The statute chooses to define the offense by referring to a higher price at one point than at another. It might define it by referring to the payment of a lower price at one point than another. The meaning would be the same. The Constitution, art. 1, § 6, provides for a trial in the county or district, previously ascertained by law, where the crime was committed. To constitute an offense there must be two sales at the least, and a sale in each of two different localities. If two sales at points in different counties are compared there must be an act in each to constitute the offense. The offending fact is that there are sales at different prices and thereby discrimination. The question is not free of difficulty, but we are content to hold that the venue was properly laid in Cottonwood county.

2. The selection of those "engaged in the business of buying milk, cream or butterfat for manufacture or for sale," as the subject-matter of the legislation, is claimed to contravene the equal protection clause of the Federal and state constitutions. That such classification is not subject to constitutional objection was held in State v. Bridgeman & Russell Co., 117 Minn. 186, 134 N. W. 496, Ann. Cas. 1913D, 41, involving the discrimination between different localities in the purchase of dairy products, after proper allowance for difference in transportation charges, "with the intention of creating a monopoly or destroying the business of a competitor." The statute was amended in 1913, 1917 and 1921, without materially changing the condition quoted. The amendment of 1923 omitted it. The statute, similar in character, involved and held valid in State v. Standard Oil Co., 111 Minn. 85, 126 N. W. 527, Laws 1907, c. 269, G. S. 1923, § 10474, was directed against the discrimination between different localities in the selling of petroleum or its products at different prices in different localities "for the purpose of destroying the business of a competitor or creating a monopoly in any locality." In State v. Fairmont Creamery Co., 153 Iowa, 702, 133 N. W. 895, 42 L. R. A. (N. S.) 821, a statute similar to that involved in the Bridgeman & Russell Co. case was sustained. In State v. Drayton, 82 Neb. 254, 117 N. W. 768, 23 L. R. A. (N. S.) 1287, 130 Am. St. Rep. 671, and State v. Central Lumber Co., 24 S. D. 136, 123 N. W. 504, 42 L. R. A. (N. S.) 804, statutes directed against discrimination between localities for the purpose of destroying the business of a competitor or creating a monopoly, by selling at lower prices any commodities of general use, in the particular cases building material, were sustained.

The equal protection clause does not require that every evil be reached. It is enough that the Legislature sees a special evil and directs legislation against it.

In Miller v. Wilson, 236 U. S. 373, 384, 35 S. Ct. 342, 344, 345 (59 L. Ed. 628, L. R. A. 1915F, 829) the court said:

"It [the Legislature] is free to recognize degrees of harm, and it may confine its restrictions to those classes of cases where the need is deemed to be clearest. As has been said, it may `proceed cautiously, step by step,' and `if an evil is specially experienced in a particular branch of business' it is not necessary that the prohibition `should be couched in all-embracing terms.' Carroll v. Greenwich Ins. Co., 199 U. S. 401, 411. If the law presumably hits the evil where it is most felt, it is not to be overthrown because there are other instances to which it might have been applied."

What should be done and how it may be done is primarily for the Legislature. There are practical considerations of expediency. It may classify, though some inequalities result and must be tolerated. Magoun v. Illinois Trust & Sav. Bank, 170 U. S. 283, 18 S. Ct. 594, 42 L. Ed. 1037; Bosley v. McLaughlin, 236 U. S. 385, 35 S. Ct. 345, 59 L. Ed. 632; Dominion Hotel, Inc., v. Arizona, 249 U. S. 265, 39 S. Ct. 273, 63 L. Ed. 597; Seamer v. Great Northern Ry. Co., 142 Minn. 376, 172 N. W. 765. "There is a strong presumption that a Legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience, and that its discriminations are based upon adequate grounds. The equal protection clause does not require that state laws shall cover the entire field of proper legislation in a single enactment. If one entertained the view that the act might as well have been extended to other classes of employment, this would not amount to a constitutional objection." Middleton v. Texas, etc., Co., 249 U. S. 152, 157, 39 S. Ct. 227, 229, 63 L. Ed. 527. In reviewing this phase of the question in Central Lumber Co. v. South Dakota, 226 U. S. 157, 159, 161, 33 S. Ct. 66, 67 (57 L. Ed. 164) the court said:

"The subject-matter, like the rest of the criminal law, is under the control of the Legislature of South Dakota, by virtue of its general powers, unless the statute conflicts as alleged with the Constitution of the United States. The grounds on which it is said to do so are that it denies the equal protection of the laws, because it affects the conduct of only a particular class—those selling goods in two places in the state—and is intended for the protection of only a particular class—regular established dealers, and also because it unreasonably limits the liberty of people to make such bargains as they like." * * *

"We must assume that the Legislature of South Dakota considered that people selling in two places made the prohibited use of their opportunities, and that such use was harmful, although the usual efforts of competitors were desired. It might have been argued to the Legislature with more force than it can be to us that recoupment in one place of losses in another is merely an instance of financial ability to compete. If the Legislature thought that that particular manifestation of ability usually came from great corporations whose power it deemed excessive, and for that reason did more harm than good in their state, and that there was no other case of frequent occurrence where the same could be said, we cannot review their economics or their facts. That the law embodies a widespread conviction appears from the decisions in other states. State v. Drayton, 82 Neb. 254; State v. Standard Oil Co., 111 Minn. 85, 126 N. W. 527; State v. Fairmont Creamery, 153 Iowa, 702, 133 N. W. 895; State v. Bridgeman & Russell Co., 117 Minn. 186, 134 N. W. 496."

The statute does not offend the equal protection clause of either the state or federal Constitution.

3. We pass to a consideration of the guaranty of liberty of contract.

There have developed in the state a large number of so-called centralized creameries...