Flank Oil Co. v. Tennessee Gas Transmission Company

349 P.2d 1005, 141 Colo. 554, 1960 Colo. LEXIS 736
CourtSupreme Court of Colorado
DecidedFebruary 16, 1960
Docket19260
StatusPublished
Cited by35 cases

This text of 349 P.2d 1005 (Flank Oil Co. v. Tennessee Gas Transmission Company) is published on Counsel Stack Legal Research, covering Supreme Court of Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Flank Oil Co. v. Tennessee Gas Transmission Company, 349 P.2d 1005, 141 Colo. 554, 1960 Colo. LEXIS 736 (Colo. 1960).

Opinion

Mr. Justice Doyle

delivered the opinion of the Court.

*557 The parties will be referred to as they appeared in the trial court. Plaintiffs instituted this action pursuant to the Colorado Unfair Practices Act, C.R.S. ’53, 55-2-1, et seq., seeking temporary and permanent injunctive relief against alleged violations of the Act. Following filing of the complaint which named all of the defendant oil companies as defendants, the matter was set for hearing on the several defendants’ motions to dismiss the complaint. After a lengthy hearing the trial court determined Section 3 of the Act to be so vague and indefinite that it failed to provide notice of prohibited conduct and thus violated the due process clause of the Fourteenth Amendment of the Constitution of the United States. Plaintiffs thereupon elected to stand upon the complaint as filed and requested that a final judgment of dismissal be entered. They then obtained a writ of error and the matter is now before us on the propriety of the ruling that Section 3 is on its face so vague and indefinite as to be invalid.

The purpose of the Unfair Practices Act is stated in Section 16 of the Act to be:

“ * * * to safeguard the public against the creation or perpetuation of monopolies and to foster and encourage competition, by prohibiting unfair and discriminatory practices by which fair and honest competition is destroyed or prevented. This article shall be liberally construed that its beneficial purposes may be subserved.”

As a means of effectuating these ends Section 3 of the Act (55-2-3) declares that it shall be unlawful to sell or offer for sale any article or product for less than the cost thereof for the purpose of injuring competitors and destroying competition. The term cost is defined as including cost of raw materials, labor and all overhead expenses of the producer; as applied to distribution, cost is defined as the invoice or replacement cost, whichever is lower, plus the “cost of doing business” by the distributor and vendor. The “cost of doing business” or “overhead expense” is defined as all cost of doing busi *558 ness incurred in the conduct of such business. The Act declares that this item must include without limitation: labor, including salaries of executives and officers; rent, interest on borrowed capital, depreciation, selling cost, maintenance of equipment, delivery costs, credit losses, all types of licenses, taxes, insurance and advertising.

The sanction plaintiff seeks to invoke is that set forth in Section 9 of the Act which declares any person, firm, etc., may maintain an action to enjoin the continuance of any act in violation of the statute. It declares that if the court shall find that defendants are violating or have violated any of the provisions of Sections 1 to 7 of the Act it shall enjoin a continuance of such violations. This section also provides for recovery of treble damages. However, we take note of the fact that the complaint makes no such demand, and we are not called upon to evaluate the statute in the light of any penal or criminal sanction.

The complaint alleges that all of the defendants were violating Section 3 of the Act; that they were all engaged in the distribution of gasoline at wholesale in Colorado and that they controlled the retail price at retail outlets. Further allegations concern the costs of the various defendants in terms of cost per gallon of gasoline at the refinery, cost of transportation per gallon from the refinery to Denver, Colorado, combined taxes per gallon of gasoline and estimated overhead expenses per gallon of gasoline, including labor, rent, interest on borrowed capital, depreciation, maintenance of equipment, licenses, taxes, insurance, utilities and advertising. The complaint further alleges that the retail price at which the defendants were selling gasoline was below their costs and that such sales were for the purpose of injuring competitors and destroying competition.

The complaint also contains separate claims against the defendant Tennessee Gas Transmission Company and Carter Oil Company, alleging individual violations and a *559 conspiracy to violate Section 1 (discriminatory price) and Section 7 (secret rebates) of the Act.

In addition to motions seeking dismissal, various other motions were filed by several of the defendants, including dismissal of the request for a temporary restraining order and preliminary injunction on the ground that the Act makes no provision for such relief, and on the further basis that the complaint fails to state a claim entitling the plaintiff to temporary emergency relief. There were also motions for more definite statement and for dismissal on the ground of failure to state a claim. There were no rulings on these additional motions. The trial court dismissed the action as to all defendants, and in its decision said:

“Let the record further show this Court after listening to the arguments as presented by counsel, and thoroughly going through the file, including the Complaint and the Motions, and some of the authorities as presented by the parties, does hereby decide that Section 55-2-3 of the 1953 Colorado Revised Statutes, known as the ‘cost of doing business section’ is so vague and indefinite that it makes it impossible to intelligently express a lawful course of conduct to pursue, and the Section therefore violates the 14th Amendment, the Due Process Clause of the Constitution of the United States, and is void.

“In the light of the above finding, the Motions herein mentioned to Dismiss as filed by the parties is granted.”

In seeking reversal the plaintiff raises the following points:

1. That it was improper to determine the constitutionality of the Act on motion to dismiss; that the lack of valid standard is not apparent on the face of the statute and consequently the question of adequacy of the standard is ascertainable only in the light of the evidence on the trial.

2. That the court erred in failing to presume validity and in failing to require the defendants to demonstrate *560 beyond a reasonable doubt the unconstitutionality of the statute.

3. That the Act is a valid exercise of the police power and should be upheld unless its unconstitutionality is clearly demonstrated.

4. That the statute is not shown to be vague and indefinite merely because its terms are difficult to apply.

Defendants’ argument (highly summarized) is that the cost standard is so palpably ambiguous and indefinite as to be on its face irreconcilable with the due process requirements of the constitution; that no amount of evidence at any hearing will furnish further enlightenment nor serve to demonstrate the obvious impracticability of the provision.

I.

Plaintiff’s major complaint revolves around the summary disposition of the action on motion to dismiss. It points out that the statute has been on the books for many years and that it constitutes a declaration of the public policy of Colorado which has had recognition during the period since its enactment.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

In Re Mercy Housing Management Group Inc. v. Naomi Bermudez.
2024 CO 68 (Supreme Court of Colorado, 2024)
Estate of Keenan v. Colorado State Bank
252 P.3d 539 (Colorado Court of Appeals, 2011)
Parish Oil Co., Inc. v. Dillon Companies, Inc.
523 F.3d 1244 (Tenth Circuit, 2008)
People v. Heitzman
852 P.2d 443 (Supreme Court of Colorado, 1993)
People v. Trimble
839 P.2d 1168 (Supreme Court of Colorado, 1992)
So-Lo Oil Co. v. Total Petroleum, Inc.
832 P.2d 14 (Supreme Court of Oklahoma, 1992)
Dunlap v. Colorado Springs Cablevision, Inc.
799 P.2d 416 (Colorado Court of Appeals, 1990)
Western Refining Corp. v. State, Department of Revenue
767 P.2d 772 (Colorado Court of Appeals, 1988)
Glenn Smith Oil Co. v. Sheets
1985 OK 56 (Supreme Court of Oklahoma, 1985)
Exotic Coins, Inc. v. Beacom
699 P.2d 930 (Supreme Court of Colorado, 1985)
Hartsock-Flesher Candy Co. v. Wheeling Wholesale Grocery Co.
328 S.E.2d 144 (West Virginia Supreme Court, 1984)
Pepcol Manufacturing Co. v. Denver Union Corp.
668 P.2d 971 (Colorado Court of Appeals, 1983)
Anchorage Joint Venture v. Anchorage Condominium Ass'n
670 P.2d 1249 (Colorado Court of Appeals, 1983)
Red Owl Stores, Inc. v. Commissioner of Agriculture
310 N.W.2d 99 (Supreme Court of Minnesota, 1981)
Baseline Liquors v. Circle K Corp.
630 P.2d 38 (Court of Appeals of Arizona, 1981)
Weissman v. Board of Ed. of Jefferson Cty. Sch. Dist.
547 P.2d 1267 (Supreme Court of Colorado, 1976)
General Motors Corporation v. State
509 P.2d 1260 (Supreme Court of Colorado, 1973)
People v. Cardwell
510 P.2d 317 (Supreme Court of Colorado, 1973)
Howe v. People
496 P.2d 1040 (Supreme Court of Colorado, 1972)

Cite This Page — Counsel Stack

Bluebook (online)
349 P.2d 1005, 141 Colo. 554, 1960 Colo. LEXIS 736, Counsel Stack Legal Research, https://law.counselstack.com/opinion/flank-oil-co-v-tennessee-gas-transmission-company-colo-1960.