State v. Sears

Decision Date05 June 1940
Docket Number27886.
Citation103 P.2d 337,4 Wn.2d 200
PartiesSTATE v. SEARS.
CourtWashington Supreme Court

Action by the State of Washington against Carlton I. Sears to restrain defendant from committing certain acts in violation of the Unfair Practices Act. Judgment for plaintiff, and defendant appeals.



All that the Unfair Practices Act contemplates by its definitions of "article or produce" as including any article service, or output of a service trade and "vendor" as including any person who performs work upon or improves any personal property belonging to another, is that labor, at the prevailing wage scale in the trade in which such person is engaged, shall be considered in determining the cost of doing business, and though it should appear that the wages paid by one prosecuted under the act are lower than the prevailing wage scale, such person would not be guilty of violating the act unless it appeared that such wages were willfully paid with intent to injure competitors and destroy competition. Laws 1939, p. 923, § 1.

Appeal from Superior Court, Thurston County; D. F Wright, judge.

Clifford & Campbell, of Olympia, for appellant.

John T. Dalton and Wettrick, Flood, O'Brien & Stuntz, all of Seattle, Chester McCarty, of Portland, Or., Cosgrove, Terhune & Schlosstein, of Seattle, and Joseph Kindall, of Bellingham, amici curiae.

Smith Troy and John S. Lynch, Jr., both of Olympia, and Albert D. Rosellini, of Seattle, for respondent.

JEFFERS, Justice.

This action was instituted by the prosecuting attorney of Thurston county, to restrain defendant from committing certain acts in violation of Laws of 1939, chapter 221, p. 923, known as the 'Unfair Practices Act.'

The complaint sets up five purported causes of action, wherein five purported violations of the act are alleged to have taken place. The complaint alleges, generally, and as applicable to each cause of action, that defendant is an agent and salesman of Rexall Drug Company, a corporation organized and existing under the laws of the state of Washington, and having its sole place of business in Olympia, Washington, where it operates two stores, one on Fifth avenue and Capitol Way, to which we shall refer as Rexall, and the other on Fourth avenue and Washington street, to which we shall refer as Security. It is further alleged that the merchandise referred to in each cause of action is a standard article of standard quality in the retail drug business; and that the acts done in each cause of action were done with intent and for the purpose of injuring competitors or destroying competition.

In the first cause of action, it is further alleged that defendant, at the Rexall store, offered for sale and sold Lucky Strike, Chesterfield and Camel cigarettes, at the retail price of fifteen cents per package, or two packages for twenty-nine cents, and $1.39 per carton, whereas at the Security store, defendant offered for sale and sold the same brands of cigarettes for sixteen cents per package, or two packages for thirty-one cents, and $1.45 per carton; that such retail prices were fixed at Rexall and at Security with the intent and for the purpose of discriminating between different sections of the same community and city, in violation of §§ 2 and 4 of the act.

In the second cause of action, it is further alleged that defendant, at the Rexall store, offered for sale and sold Pond's cold cream at the retail price of nineteen cents per two-ounce bottle, which retail price was less than cost thereof to the Rexall Drug Company, as such costs are defined in § 1, chapter 221, supra, in violation of § 4 of the act.

In the third cause of action, it is alleged that defendant, at both Rexall and Security, offered for sale and sold two 1 1/4-ounce packages of Model tobacco, at the retail price of nineteen cents per package, and gave away, in connection with the purchase, one briar pipe, which was of the reasonable value of not less than twenty-five cents, in violation of § 4 of the act.

In the fourth cause of action, it is alleged that defendant, at the Security store, offered for sale and sold Hobart's aspirin, at ten cents per bottle, which was below cost, and used such aspirin as a 'loss leader,' as defined in § 1, chapter 221, supra, in violation of § 4 of the act.

In the fifth cause of action, it is alleged that at the Security store, defendant offered for sale and sold Eli hospital cotton, in pound packages, for twenty-nine cents per pound, while at the Security store, during the same time, defendant offered for sale and sold to certain other customers the same article at twenty-three cents per pound, in violation of § 4 of the act.

Defendant demurred to the complaint, on the ground that it failed to state facts sufficient to constitute a cause of action. The trial court overruled the demurrer, and, defendant having elected to stand on his demurrer, the court, on December 2, 1939, entered judgment granting to plaintiff the relief prayed for in the complaint, and defendant has appealed.

Appellant, by demurring and refusing to further plead, admits that he has violated the Unfair Practices Act in each of the five ways alleged in the complaint. Appellant, however, does not admit that chapter 221 is constitutional, but on the contrary contends that the act is unconstitutional in several respects. Respondent does not question the right of appellant to raise the question of the constitutionality of the various sections of the act.

This act represents an attempt on the part of the legislature to regulate business as a whole, by prohibiting practices which the legislature has determined constitute unfair trade practices. Its stated purpose (§ 15) is to safeguard the public against the creation or perpetuation of monopolies, and to foster and encourage competition, by prohibiting unfair, dishonest, deceptive, destructive, fraudulent and discriminatory practices, by which fair and honest competition is destroyed or prevented. It is further declared that the act shall be liberally construed, that its beneficial purposes may be subserved.

It is apparent that the statute was passed in the attempted exercise of the state's police power. That being so, the inquiry of this court is limited to determining whether the object of the statute is one for which the police power may legitimately be invoked, and, if so, whether the act bears a reasonable and substantial relation to the object sought to be attained. The two problems involve substantially different considerations, and will be separately discussed.

We are of the opinion that the avowed purpose of the act is well within the state's police power. We believe it has become firmly established that the police power of the state extends not only to the preservation of the public health, safety and morals, but also to the preservation and promotion of the public welfare. Tacoma v. Boutelle, 61 Wash. 434, 112 P. 661. In Shea v. Olson, 185 Wash. 143, 53 P.2d 615, 619, 111 A.L.R. 998, we find the following statement relative to police power: 'However difficult it may be to give a precise or satisfactory definition of 'police power,' there is no doubt that the state, in the exercise of such power, may prescribe laws tending to promote the health, peace, morals, education, good order, and welfare of the people. Police power is an attribute of sovereignty, an essential element of the power to govern, and a function that cannot be surrendered. It exists without express declaration, and the only limitation upon it is that it must reasonably tend to correct some evil or promote some interest of the state, and not violate any direct or positive mandate of the constitution.'

The legislature is vested with a wide discretion in determining what the public interest requires, and what measures are necessary to protect those interests. State v. Somerville, 67 Wash. 638, 122 P. 324; Shea v. Olson, supra; McDermott v. State, 197 Wash. 79, 84 P.2d 372.

Appellant contends that, instead of safeguarding the public against monopolies and encouraging competition, the effect of the act will be to encourage monopolies and stifle competition, in that it will tend to destroy the small merchant who cannot do business as cheaply as the large concern which can go into the open market and buy for much less than can the small merchant. It is obvious that the legislature did not think this would be the effect of the act.

'So far as the requirement of due process is concerned, and in the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. The courts are without authority either to declare such policy, or, when it is declared by the legislature, to override it. If the laws passed are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, and judicial determination to that effect renders a court functus officio.' Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 516, 78 L.Ed. 940, 89 A.L.R. 1469.

See, also, State ex rel. Davis-Smith Co. v. Clausen, 65 Wash. 156, 117 P. 1101, 37 L.R.A.,N.S., 466; Tacoma v. Fox, 158 Wash. 325, 290 P. 1010.

The following cases have held acts similar to chapter 221 within the police power of the state: People v. Kahn, 19 Cal.App.Supp.2d 758, 60 P.2d 596; Wholesale Tobacco Dealers Bureau v. National Candy & Tobacco Co., 11 Cal.2d 634, 82 P.2d 3, 118 A.L.R. 486; State v Langley, 53 Wyo. 332, 84 P.2d 767; Great Atlantic & Pacific Tea Co. v. Ervin, D.C., 23 F.Supp. 70; Associated Merchants...

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