State v. Ross

• Decision Date: 15 June 1951
• Citation: 259 Wis. 379,48 N.W.2d 460
• Parties: STATE, v. ROSS.
• Court: Wisconsin Supreme Court

Page 460

48 N.W.2d 460

259 Wis. 379

STATE, v.ROSS.

Supreme Court of Wisconsin.

June 15, 1951.

Darrell O. Hibbard, Eau Claire, for appellant.

Vernon W. Thomson, Atty. Gen., Leonard Bessman, Asst. Atty. Gen., Victor O. Tronsdal, Dist. Atty. Eau Claire County, Eau Claire, for respondent.

MARTIN, Justice.

The complaint herein alleged and the trial court found that the defendant, a retail grocer, had advertised or sold below cost as loss leaders the following described items of merchandise at the prices and on the dates indicated:

Date           Item            Invoice or Replacement Cost   Defendant's Retail
                                                                                          Price
                -------------------------------------------------------------------------------
                Oct. 5, 1949   Cigarettes      $1.75 per carton                           $1.83
                Oct. 5, 1949   Hill's Bros.    51 cents per lb.                        52 cents
                                 Coffee
                Jan. 19, 1950  Spry            73 3/4 cents per 3 lbs.                 75 cents
                Feb. 9, 1950   Rinso           49 1/4 cents for giant size             51 cents
                Jan. 12, 1950  Hilex           46 1/4 cents per gallon                 45 cents
                Oct. 20, 1949  Lux             19.56 cents per 3 bars                  20 cents
                

The answer of the defendant denied generally the allegations of the complaint, and the record shows that the defendant introduced no evidence in his behalf.All of the defendant's retail prices listed above are less than the minimum markup of six per cent required by sec. 100.30(2)(a), Stats., to be added as cost of doing business to the invoice or replacement cost.

The defendant was subpoenaed to testify in an investigation before the state department of agriculture on February 19, 1950, and before testifying he claimed immunity under the provisions of sec. 93.17, Stats.At the trial of this action, the plaintiff called the defendant adversely and he was compelled to testify over his objection that he was being forced to incriminate himself.The court ruled that the defendant had been granted immunity pursuant to the provisions of sec. 93.17, Stats., and ordered him to answer all questions material to the action.

So far as material here, sec. 100.30, Stats., provides as follows:

'(1) POLICY.The practice of selling certain items of merchandise below cost in order to attract patronage is generally a form of deceptive advertising and an unfair method of competition in commerce.Such practice causes commercial dislocations, misleads the consumer, works back against the farmer, directly burdens and obstructs commerce, and diverts business from dealers who maintain a fair price policy.Bankruptcies among merchants who fail because of the competition of those who use such methods result in unemployment, disruption of leases, and non-payment of taxes and loans, and contribute to an inevitable train of undesirable consequences, including economic depression.

'(2) DEFINITIONS.When used in this section unless context otherwise requires:

'(a)'Cost to retailer' means the invoice cost of the merchandise to the retailer within 30 days prior to the date of sale, or replacement cost of the merchandise to the retailer, whichever is lower; less all trade discounts except customary discounts for cash; to which shall be added freight charges not otherwise included in the invoice cost or the replacement cost of the merchandise as herein set forth, and cartage to the retail outlet if done or paid for by the retailer, which cartage cost, in the absence of proof of a lesser cost, shall be deemed to be three-fourths of one per cent of the cost of the retailer as herein defined after adding thereto freight charges but before adding thereto cartage and markup and a markup to cover a proportionate part of the cost of doing business, which markup, in the absence of proof of a lesser cost, shall be 6 per cent of the cost to the retailer as herein set forth after adding thereto freight charges and cartage but before adding thereto a markup.(Italics ours)

* * *

* * *

'(3) ILLEGALITY OF LOSS LEADERS.Any advertising, offer to sell, or sale of any item of merchandise either by retailers or wholesalers, at less than cost as defined in this section and any advertising, offer to give, or gift of any item of merchandise contingent upon the sale of any other item of merchandise, with the intent, or effect of inducing the purchase of other merchandise or of unfairly diverting trade from a competitor, impairs and prevents fair competition, injures public welfare, and is unfar competition and contrary to public policy and the policy of this section.

'(4) PENALTIES.Any retailer who, with the intent of inducing the purchase of other merchandise or of unfairly diverting trade from a competitor or otherwise injuring a competitor, shall advertise, offer to sell, or sell at retail any item of merchandise at less than cost to the retailer as defined in this section; or any wholesaler who, with the intent of inducing the purchase of other merchandise or of unfairly diverting trade from a competitor or otherwise injuring a competitor, shall advertise, offer to sell, or sell at wholesale any item of merchandise at less than cost to the wholesaler as defined in this section, shall be fined not less than $50, nor more than $500 for the first offense and not less than $200 nor more than $1,000 for the second and each subsequent offense, or, for each offense, imprisoned not less than one month nor more than 6 months, or both.Evidence of any advertisement, offer to sell, or sale of any item of merchandise by any retailer or wholesaler at less than cost as defined in this section shall be prima facie evidence of intent to induce the purchase of other merchandise, or to unfairly divert trade from a competitor, or to otherwise injure a competitor.

'(5) SPECIAL REMEDY.In addition to the penalties provided, the courts of this state are invested with jurisdiction to prevent and restrain violations of this section, and it shall be the duty of the several district attorneys to institute proceedings in equity to prevent and restrain violations.Any person damaged, or who is threatened with loss or injury, by reason of a violation of this section, shall be entitled to sue for and have injunctive relief in any court of competent jurisdiction against any damage or threatened loss or injury by reason of a violation hereof.

'(6) EXCEPTIONS.The provisions of this section shall not apply to sales at retail or sales at wholesale where:

'(a) Merchandise is sold in bona fide clearance sales, if advertised, marked, and sold as such;

'(b) Perishable merchandise must be sold promptly in order to forestall loss '(c) Merchandise is imperfect or damaged or is being discontinued and is advertised, marked, and sold as such;

'(d) Merchandise is sold upon the final liquidation of any business and is advertised, marked, and sold as such;

'(e) Merchandise is sold for charitable purposes or to relief agencies;

'(f) Merchandise is sold on contract to departments of the government or governmental institutions;

'(g) The price of merchandise is made in good faith to meet competition;

'(h) Merchandise is sold by any officer acting under the order or direction of any court.'

Appellant has expressed a disapproval of the policy of the statute.The economic desirability of laws is exclusively a legislative concern.

'In entering upon a consideration of the questions raised upon this appeal, we may appropriately repeat what has been said many times before that under our system of government the court is not called upon to consider the economic, social, and political matters dealt with in the act.Whatever conclusion may be reached as the result of our deliberation, it in no way involves the determination by the court of the social value of the objectives sought. * * *'Gibson Auto Co. v. Finnegan, 1935, 217 Wis. 401, 406, 259 N.W. 420, 422.See also: Wholesale Tobacco Dealers Bureau v. National Candy & T. Co., 1938, 11 Cal.2d 634, 82 P.2d 3, 11, 118 A.L.R. 486.

Appellant's next contention is that the statute is an arbitrary and unreasonable attempt to exercise the police power of the state.

The police power, which is about all the power that sovereign government has, aside from its power of eminent domain and taxation, is not limited to protection of public health, morals, and safety.It extends also to economic needs.The benefit to be derived from the enactment of a statute under the authority of legislative police power is primarily a question for determination of the legislature and its determination will not be set aside unless it manifestly appears to be an arbitrary one and based on no substantial ground.

Statutes of other states similar to sec. 100.30, Stats., have been held a constitutional exercise of the police power.Courts have said that the declaration of the legislature that sales below cost under certain circumstances are an economic evil is conclusive and that the means employed to prevent them were reasonably adapted.Wholesale Tobacco Dealers Bureau v. National Candy & T. Co., supra;Moore v. Northern Kentucky Independent Food Dealers Ass'n, 1941, 286 Ky. 24, 149 S.W.2d 755, 759;Associated Merchants of Montana v. Ormesher, 1939, 107 Mont. 530, 86 P.2d 1031;State v. Langley, 1938, 53 Wyo. 332, 84 P.2d 767, 772-773;McElhone v. Geror, 1940, 207 Minn. 580, 292 N.W. 414, 418.

Sec. 100.30, Stats., does not forbid all sales below cost, but only those made with the intent of committing the trade devices it has determined unfair and harmful and is a constitutional exercise of the state police power.

The pertinent provision in sec. 100.30(4), Stats., reads as follows: 'Evidence of any advertisement, offer to sell, or sale of any item of merchandise by any retailer or wholesaler at less than cost as defined in this section shall be prima facie evidence of intent to induce the purchase of...