Englebrecht v. Day

1949 OK 154, 208 P.2d 538, 201 Okla. 585, 1949 Okla. LEXIS 376
CourtSupreme Court of Oklahoma
DecidedJuly 5, 1949
DocketNo. 33869
StatusPublished
Cited by29 cases

This text of 1949 OK 154 (Englebrecht v. Day) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Englebrecht v. Day, 1949 OK 154, 208 P.2d 538, 201 Okla. 585, 1949 Okla. LEXIS 376 (Okla. 1949).

Opinion

O’NEAL, J.

This is a proceeding in equity by Warren O. Englebrecht, doing business as Warren’s Grocery, hereinafter referred to as plaintiff, against Ernest Day and others, hereinafter referred to as defendants, for an injunction restraining alleged violation by defendants of the Oklahoma “Unfair Sales Act”, 15 O.S. 1941 §§591-597, inc.

Plaintiff is engaged in the retail grocery business in Muskogee, Okla. Defendants Ernest Day and Mrs. Ernest Day are husband and wife and are also engaged in the retail grocery business in Muskogee, Okla. Defendant “John Doe” Day is a brother of defendant Ernest Day and was acting as manager of the retail grocery store owned and operated by defendants Ernest Day and Mrs. Ernest Day.

Plaintiff filed his petition in the district court of Muskogee county April 7, 1948, and therein alleges that defendants did, on April 5, 1948, advertise for sale, offer for sale and sell at retail certain articles of merchandise (nine in number) separately named, at less than cost to the retailer as defined in said Act. Plaintiff further alleges that defendants had stated that they would continue to advertise for sale, offer for sale and sell at retail the foregoing items of merchandise and other items in their store in violation of the terms, restrictions and provisions of said Act. He further alleges that the items referred to were advertised for sale, offered for sale and sold at prices which cannot be justified by prevailing market conditions within the State of Oklahoma, and that said items of merchandise were advertised for sale, offered for sale and sold to the general public as “bait” with the intent or effect of inducing the purchase of other merchandise; that defendants specifically intended to violate said Act in resorting to what is commonly known as “bait” or “loss leader” merchandise with the hope of deceiving the public by luring them with this “bait” or “loss leader” merchandise into their store, hoping thereby that unsuspecting customers thus lured into the store would purchase other merchandise at unreasonably high mark-up, and that said advertising for sale, offering for sale and selling was made with the intent or effect of inducing the purchase of other merchandise and with the intent of unfairly diverting trade or otherwise injuring the plaintiff who is a competitor, and with the intent or effect to impair and prevent fair competition and injure public welfare and with the intent to substantially lessen competition and unreasonably restrain trade.

A temporary restraining order and later a temporary injunction was issued.

Defendants filed a general and special demurrer to the petition. The special demurrer attacked the constitutionality of the Unfair Sales Act as a violation of the Federal and State Constitutions. The demurrer came on to be heard and, pending the hearing on the demurrer, plaintiff asked and was granted leave to amend his petition by striking out the words “or effect” wherever they were used in the petition in connection with or following the .words “with the intent”, so as to make the petition charge that the alleged advertising for sale, offering for sale and selling said items of merchandise was with the intent of inducing the purchase of other merchandise and with the intent to impair and prevent fair competition and injure public welfare.

[587]*587After the petition was so amended, defendants refiled their demurrer thereto. After further hearing the court sustained the demurrer on the ground that the Act (15 O.S. 1941 §§591-597, inc.) under which the cause was instituted and prosecuted, is unconstitutional and void for the reason that section 593 contains language rendering the same unconstitutional by setting out the clause “or effect” after the clause “with the intent”. Plaintiff excepted and elected to stand upon the petition as amended, whereupon the cause was dismissed, and plaintiff appeals.

Four assignments of error are presented under two propositions. The first is that the Oklahoma Unfair Sales Act, 15 O.S. 1941 §§591-597, inc., is constitutional.

Plaintiff, conceding that although the general policy' of an Act of the nature of the one herein involved is for the Legislature to pass upon and not a proper subject for consideration by this court, goes quite at length into the question of the desirability of such legislation and its beneficial effects and evils of the practice of selling merchandise at less than cost to the seller and “loss leader” practices. In this connection plaintiff quotes from an article by the late Justice Brandéis, published in 1913, entitled “Cut-Throat Prices, the Competition That Kills.”

In reply thereto defendants go somewhat at length into the alleged history and general purpose of such legislation and assert in substance that such legislation, now adopted in some 32 states, and its enforcement, has in a general way been promoted by groups such as Retail Merchants Associations for their protection and that such legislation generally tends to prevent competition and protects merchants already in business and especially members of such associations against newcomers who enter the field as their competitors. Defendants further assert that such legislation has all the earmarks of monopoly or intended monopoly. In reply to the argument of plaintiff, including the quotation from the article by Justice Brandéis, defendants quote from the Yale Law Journal, January, 1948, issue, to the effect that several years’ experience under such statutes, reveal them as particularly undesirable and that while the courts have generally agreed that they were intended “to prevent monopoly” or “to prevent anarchy in commerce,” the record has not shown their sanction to protect small sellers from large scale campaigns of underselling, but, to the contrary, the laws have been used primarily by trade associations and larger units in order to prevent local price cutting and to enforce a diciplinary system of price leadership which these units desire to establish; and “Moreover, there is some evidence that the acts have been utilized as a means of raising prices.”

But in this case we are not concerned with the question of policy or the exigency of such acts generally. Some of the earlier acts in some of the states were held to be unconstitutional as restrictive of the right of the individual to sell his property at whatever price he could agree upon with his purchaser. Other acts were declared unconstitutional because the business regulated was not affected with the public interest, such as operating public utilities. But since the decision in Nebbia v. New York, 78 L. Ed. 940, 89 A.L.R. 1469, it is generally recognized that there is no closed class or category of business affected with the public interest and that the function of courts under the Fifth and Fourteenth Amendments to the Federal Constitution is to determine in each case whether under the circumstances the regulation is a reasonable exertion of governmental regulations, or is arbitrary or discriminating, and that the phrase “affected with a public interest,” as used in decisions upholding public regulation of business affected with the public interest, means only that an industry for adequate reasons is subject to control for the public good.

[588]*588Nebbia v. New York, supra, holds:

“So far as the due process requirement is concerned, a state is free to adopt and enforce whatever economic policy may reasonably be deemed to promote public welfare, whether by promoting free competition by laws aimed at monopolies, or by curbing harmful competition by fixing maximum prices.

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Bluebook (online)
1949 OK 154, 208 P.2d 538, 201 Okla. 585, 1949 Okla. LEXIS 376, Counsel Stack Legal Research, https://law.counselstack.com/opinion/englebrecht-v-day-okla-1949.