BALZER v. CALER (1937)

The plaintiff appealed from a judgment refusing to issue an injunction to prohibit the respondent, Donald L. Caler, an independent merchant of Los Angeles who was engaged in selling meats and groceries, from disposing of certain staple articles for less than cost thereof, contrary to the provisions of sections 3 and 6 of the Unfair Competition Act of California. Stats. 1913, p. 508, as amended in 1935 at page 1546, Deering's Supp. of 1935, p. 2063, Act 8781.

The trial court held the act to be unconstitutional, but determined that the goods were not sold by the respondent below cost “for the purpose of injuring competitors and destroying competition.” On the contrary, the court found that the goods were sold below cost as a means of advertising to attract customers to his store and to stimulate business.

Two questions are presented on this appeal: First, is the act unconstitutional? Second, if the act is constitutional, is it necessary for the goods to be sold for less than cost “for the purpose of injuring competitors and destroying competition” in order to constitute a violation of statute?

The act, as amended in 1935, was in effect at the time this suit was commenced. It is penal in its nature. It declares that a violation of its provisions shall constitute a misdemeanor punishable by fine or imprisonment, or both. The act is almost limitless in its application to occupations and to the disposal of property which is the product of labor or industry. It attempts to render unlawful and criminal the sale, offering for sale, or advertising for sale, “any article or product, or service or output of a service trade, at less than cost thereof to such vendor” for the purpose of injuring competitors and destroying competition. It also penalizes the gift of any such article or product when it is disposed of for the same purpose. The appellant contends the statute makes it unlawful to sell private property below cost regardless of the purpose with which the sale is made.

Those portions of the act which are involved on this appeal read as follows:

Section 3: “It shall be unlawful for any person, partnership, firm, corporation, joint stock company, or other association engaged in business within this State, to sell, offer for sale or advertise for sale any article or product, or service or output of a service trade, at less than the cost thereof to such vendor, or give, offer to give or advertise the intent to give away any article or product, or service or output of a service trade for the purpose of injuring competitors and destroying competition, and he or it shall also be guilty of a misdemeanor, and on conviction thereof shall be subject to the penalties set out in section 11 of this act for any such act.” St.1935, p. 1548.

Definitions: “The term ‘cost’ as applied to production is hereby defined as including the cost of raw materials, labor and all overhead expenses of the producer; and as applied to distribution ‘cost’ shall mean the invoice or replacement cost, whichever is lower, of the article or product to the distributor and vendor plus the cost of doing business by said distributor and vendor.

“The ‘cost of doing business' or ‘overhead expense’ is defined as all costs of doing business incurred in the conduct of such business and must include without limitation the following items of expense: 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.”

Section 6: “The provisions of sections 3, 4 and 5 shall not apply to any sale made:

“(a) In closing out in good faith the owner's stock or any part thereof for the purpose of discontinuing his trade in any such stock or commodity, and in the case of the sale of seasonal goods or to the bona fide sale of perishable goods to prevent loss to the vendor by spoilage or depreciation, provided notice is given to the public thereof;

“(b) When the goods are damaged or deteriorated in quality, and notice is given to the public thereof;

“(c) By an officer acting under the orders of any court;

“(d) In an endeavor made in good faith to meet the legal prices of a competitor as herein defined selling the same article or product, or service or output of a service trade, in the same locality or trade area.

“Any person, firm or corporation who performs work upon, renovates, alters or improves any personal property belonging to another person, firm or corporation, shall be construed to be a vendor within the meaning of this act.” St.1935, p. 1549.

Section 13: “The Legislature declares that the purpose of this act is 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 act shall be literally construed that its beneficial purposes may be subserved.” St.1935, p. 1550.

This is a suit for injunction brought by an individual under section 10 of the act which states that “any person * * * may maintain an action to enjoin a continuance of any act or acts in violation of sections 1 to 7” thereof. The complaint is couched in four counts. The first cause alleges that the defendant, Donald L. Caler, owns and operates two stores in the city of Los Angeles at each of which he retails fish, meats, poultry, dairy products, bakery products, and all sorts of groceries; that other merchants also maintain establishments in that vicinity where they retail products and groceries of similar character; that on specified dates in November, 1935, the respondent offered and advertised for sale “Formay” shortening, oleomargarine, “Best Foods” brand of mayonnaise and “Kellogg's” corn flakes at prices which were less than “invoice or replacement cost” thereof to him. It is not alleged in the first count that these offers of sales were made “for the purpose of injuring competitors and destroying competition.” The second cause of action after alleging the same facts above stated further charges that the sales were offered “for the purpose of injuring competitors and destroying competition.” The third cause of action alleges that the respondent actually sold the products mentioned for less than cost thereof. The fourth cause alleges that he actually sold those products for less than cost “for the purpose of destroying competition” in the trade and business in which the defendant was engaged.

Special demurrers to each count were overruled. The respondent denied the material allegations of the complaint, but admitted that he sold the articles mentioned in the complaint for the prices stated therein which were slightly less than invoice or replacement prices therefor. But he denied they were sold to injure competitors or to destroy competition. On the contrary, he alleges that he sold the goods for less than cost for the sole purpose of meeting the competition of other merchants who were engaged in selling similar commodities in that vicinity, and for the purpose of advertising and stimulating his own business.

Upon trial of the cause the court adopted findings to the following effect: That the defendant, Caler, is an independent merchant who owns two small stores in Los Angeles, the combined stocks of which are of the aggregate value of about $12,000; that he retails at each of these stores some two thousand different items of food supplies; that the plaintiff also operates a similar store in that city situated about two miles from the location of the last–mentioned stores; that numerous other merchants operate similar establishments in Los Angeles where they compete with the respondent in the sale of like food supplies, some of which tradesmen conduct only one establishment supplied with a comparatively small stock of goods, while others operate many large enterprises, or system of chain stores in that city and throughout the state of California, with vast capital investments amounting to more than a million dollars, and that they advertise extensively at large expense; that these great establishments buy their commodities at prices substantially lower than those at which the respondent and other small stores are able to purchase them, on account of the large quantities of various articles which the former require; that, for advertising purposes, it is the custom of the managers of these competing stores, and of all like mercantile establishments, to periodically offer for sale certain staple articles of food and supplies similar to those which the respondent is charged with selling below cost, at prices less than cost to them; that the respondent did sell, at the dates stated, the four articles mentioned in the complaint at prices slightly less than invoice or replacement cost therefor; that he did not sell those articles under circumstances rendering the sales exempt from the inhibitions of the Unfair Competition Act as provided by subdivisions (a) to (c) of section 6 thereof, but, on the contrary, that he did sell them for less than cost to meet the reduced prices at which other competing merchants sold the same or similar articles and with the sole purpose of advertising his business, improving his trade, and stimulating interest on the part of customers in those products and in his business, and not with the intention of injuring competitors or destroying competition. The court specifically found that this method of advertising occasional sales of a limited number of special articles at less than cost does not have the effect of injurying competitors or destroying competition, and that it did not have that effect in the present case. It was further found that the respondent violated none of the provisions of the statute in question but that the act is in conflict with the provisions of article 1, §§ 1 and 14, of the California Constitution, and Amendment 14, § 1, of the Federal Constitution, in denying the constitutional guaranty of the right to own and control private property and to enjoy the privilege of life, liberty, and the pursuit of happiness. The findings are supported by the evidence.

Judgment was accordingly rendered against the plaintiff denying his application for an injunction and dismissing his action. From that judgment this appeal was perfected.

It is not a violation of section 3 of the Unfair Competition Act, as it existed before the amendment of that statute in 1937, St.1937, p. 2396, to sell, offer for sale, advertise for sale, or give away goods, unless the act is performed “for the purpose of injuring competitors and destroying competition.” The essential purpose of injuring or destroying competition, mentioned in the statute, applies to the sale, offering articles for sale, or advertising them for sale, as well as to gifts of property. The clause with relation to the purpose or intent with which the transaction is performed modifies the first portion of the paragraph affecting the disposition of articles for a consideration, as well as the latter portion relating to gifts of property. The very purpose of the act, as declared by the Legislature, and from a reading of the paragraph as a whole, convinces us that this is a fact. It would be absurd to hold that a merchant might give away his property without any consideration whatever, provided he did not intend thereby to injure his competitors, but, if he sold or offered to sell that same property for an insignificant proportion of its value, he would be civilly and criminally guilty of unfair practice. If that were the proper construction of the statute, all that a merchant would have to do to avoid the penalty of the law would be to sell the property for 1 per cent. of its cost or offer to give to any purchaser of one package of Kellogg's Corn Flakes a duplicate package of the same breakfast food without charge. Or he might give a prize with every item of food that was sold. There is a total absence of reason in that construction of section 3 which limits the modifying clause requiring the transaction to have been done “for the purpose of injuring competitors.” There is no merit in this contention of the appellant. There would be no room for his construction of that paragraph were it not for the omission of a comma before the words “for the purpose of injuring,” etc. The intent of the Legislature to apply this modifying clause to both sales and gifts of property seems clear, in spite of the omission of a comma. Punctuation is never a controlling factor in construing a statute. The presence or the absence of punctuation marks may be ignored if necessary to determine the true meaning of language employed by the Legislature. Roth Drug, Inc. v. Johnson, 13 Cal.App.2d 720, 728, 57 P.2d 1022; United States v. Shreveport Grain & Elevator Co., 287 U.S. 77, 53 S.Ct. 42, 77 L.Ed. 175; 23 Calif.Jur. 733, § 111. In the authority last cited it is said: “No doubt punctuation may be considered in reading a statute, but punctuation is never a controlling factor of interpretation, and it may be entirely disregarded when necessary to ascertain the true intent and meaning.”

In applying the foregoing construction of the language of section 3 of the act to the facts of the present case, it becomes apparent respondent was not guilty of violating that statute. Plaintiff failed to prove a cause of action against him. It was a necessary element of the illegal selling of goods for less than cost, as the statute existed when this case was tried, that the act be performed with the purpose of injuring competitors and destroying competition. The burden was on the plaintiff to establish that unlawful purpose. The record in this case is devoid of any such evidence. The court specifically found that the respondent did not sell the goods below cost with that purpose in view. On the contrary, the court found that he sold the goods below cost for the sole purpose of advertising his grocery business and to stimulate trade. Every reasonable deduction from the evidence supports that finding. Every sound and fair–thinking man knows that it is the common practice of merchants to periodically display in their show windows leader articles from their stocks at reduced prices for advertising purposes to attract the attention of customers and to stimulate trade. It is a well–recognized method of advertising. For more than a quarter of a century merchants in America have occasionally displayed staple articles at reduced prices, offered gifts and prizes, issued trade stamps, paid rebates, and resorted to other cut–rate methods of advertising their commodities to stimulate trade in the hope that a slight sacrifice on a few staple articles would be more than compensated by an increased bulk of business. It is not unusual or strange that the respondent in this case resorted to that common practice. We are unable to comprehend how the court could have found otherwise, regarding the purpose of the sale of these four staple articles, in view of the evidence which was adduced at the trial. At least we must concede that finding is supported by substantial evidence. Indeed, that fact is not controverted by the appellant.

In view of our construction of section 3 of the act we would not be warranted in proceeding to determine the further question as to whether section 3 of the act is unconstitutional and void for uncertainty and unreasonable discrimination because it violates the provisions of article 1, §§ 1 and 14, of the California Constitution, and Amendment 14, § 1, of the Federal Constitution, guaranteeing all men the right to own and control private property and to enjoy the privilege of life, liberty, and the pursuit of happiness without undue interference by unreasonable regulations and by an attempt to fix the price at which an owner may dispose of his own property, contrary to the due process clause of the Federal Constitution, were it not for the fact that a contrary construction of that section is strenuously insisted upon by the appellant.

We are impressed with the assertion that the act in question as it existed in 1935, instead of encouraging competition and destroying monopolies, as the statute declares that it was intended to do, has just the opposite effect. It seems apparent to us that the act tends to encourage monopolies and destroy competition. It is common knowledge that large and opulent industries with unlimited capital are able to purchase commodities on the open market at wholesale for much less that they can be bought by small independent merchants, for the reason that the former procures them in vastly greater quantities and distributes them among a large number of retail stores under its management. The large industry is able to allocate its overhead expenses, prominent among which is the important item of advertising, among its numerous branches, to its very great advantage. It necessarily follows that the wholesale cost to the large institution of staple articles is much less than the cost of those same commodities to small merchants. The large enterprise therefore may undersell the small merchant without violating the statute. The statute is therefore not uniform in its application. The act renders it unlawful for merchants, regardless of the size or number of their stores and independently of their capital, purchasing power, or overhead expenses, to sell their commodities for less than cost to themselves. The large company may spend thousands of dollars per month in advertising, and distribute that item of cost among numerous branches, while the small merchant cannot afford to spend more than a small proportion thereof. The former may purchase a shipload of Brazilian coffee and sell it to their customers for several cents per pound less than the small merchant is able to do, without violating the provisions of the law. It is evident that the act therefore tends to destroy the small merchant and encourage monopoly.

A court is not bound by the statutory declaration with respect to the effect of the law when that legislative statement is evidently wrong. It has been frequently declared that a Legislature, even under its police powers, may not in the guise of regulative trade abuses for the protection of public interests, arbitrarily interfere with private business, or impose unusual and onerous restrictions upon lawful occupations. Lawton v. Steele, 152 U.S. 133, 137, 14 S.Ct. 499, 38 L.Ed. 385; Ganley v. Claeys, 2 Cal.2d 266, 40 P.2d 817; Ex parte Drexel, 147 Cal. 763, 82 P. 429, 431, 2 L.R.A.,N.S., 588, 3 Ann.Cas. 878; People v. Pace, 73 Cal.App. 548, 562, 238 P. 1089. In the Drexel Case it is said in that regard: “The Legislature, under the guise of police regulations, cannot enact laws which do not pertain to one or the other of these objects, and which impose onerous and unnecessary burdens upon business and property.”

Quoting with approval from Mugler v. Kansas, 123 U.S. 623, 661, 8 S.Ct. 273, 297, 31 L.Ed. 205, the Drexel Case further says: “‘The courts are not bound by mere forms, nor are they to be misled by mere pretense. They are at liberty––indeed, are under a solemn duty––to look at the substance of things whenever they enter upon the inquiry whether the Legislature has transcended the limits of its authority.”’

We are of the opinion section 3 of the Unfair Competition Act, as it existed in 1935, is void for uncertainty. It also discriminates between persons of the same class. As we have previously stated, the extensive and wealthy mercantile establishment with numerous branches is able to purchase its commodities at reduced prices and to allocate its overhead expenses so as to retail articles and products at a cost price with which the small merchant cannot compete. The statute favors the large enterprise in that respect. It is an unfair discrimination against the very class of competition which the statute purports to favor. This section is in conflict with article 1, § 11, of the Constitution of California, which provides that “All laws of a general nature shall have a uniform operation.”

The act is vague, uncertain, and incapable of application in its method of ascertaining the vendor's cost of articles and products for the purpose of fixing a figure below which it is rendered unlawful and criminal to sell the goods. Section 3 defines the term “cost,” as applied to distribution, to mean “the invoice or replacement cost, whichever is lower, * * * plus the cost of doing business by said distributor and vendor.” The “cost of doing business” is defined as “all costs * * * incurred in the conduct of such business.” The act declares that it “must include without limitation the following items of expense: 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.” According to the language of the statute, the aggregate of all of these various items must be added to the “invoice or replacement cost” of a particular article which the vendor desires to sell, to determine the price below which he is precluded from disposing of the goods. A bare statement of the asserted rule demonstrates its absurdity. It is not the proportion of the overhead expenses which the value of the article for sale bears to the value of the entire stock of goods, which is to be added to the invoice price of the article, but “all costs * * * incurred in the conduct of such business” are to be added thereto. Moreover, the statute fails to state what period of time is to be included in estimating overhead expenses which are to be added to the invoice price of the article to be sold so as to determine its cost for resale thereof. A merchant's stock in trade varies from time to time. Meats, bakery products and certain classes of groceries deteriorate rapidly. Is the merchant to take stock and hold an accounting every time he wishes to display for sale a few leader articles below normal price for the purpose of advertisement? For the purpose of such sales is he to estimate his average overhead expenses for the period of a year, or for a month, or is he to ascertain that sum on the very day on which he proposes to sell the forbidden article? By what standard is a merchant to determine such elements as depreciation of goods, selling cost, or credit losses? What is to be the measure of the value of his equipment? Is there to be no limit of expenditures for interest, insurance, or advertising? The statute throws no light upon these perplexing problems. Every merchant is left to guess at the rules and standards to be applied and to determine for himself the period for which the overhead expenses are to be calculated. The section is therefore uncertain and void in that regard. Numerous authorities hold that, when a statute is so indefinite and uncertain with respect to an element which is necessary to constitute the criminal offense or the unlawful act prohibited that men of common intelligence will differ substantially as to its meaning or application, it is deemed to be unenforcible and void. Under such circumstances the statute may not be enforced since it violates the “due process of law” clause of the Federal Constitution. Connally v. General Construction Co., 269 U.S. 385, 46 S.Ct. 126, 70 L.Ed. 322; Champlin Refining Co. v. Corporation Comm., 286 U.S. 210, 52 S.Ct. 559, 76 L.Ed. 1062, 86 A.L.R. 403; Hewitt v. State Board of Medical Examiners, 148 Cal. 590, 84 P. 39, 3 L.R.A.,N.S., 896, 113 Am.St.Rep. 315; In re Peppers, 189 Cal. 682, 209 P. 896; Ex parte Schmolke, 199 Cal. 42, 248 P. 244; Mayhew v. Nelson, 346 Ill. 381, 178 N.E. 921, 923. In the case last cited, the rule regarding the invalidity of a statute for uncertainty is concisely stated as follows:

“A legislative act which is so vague, indefinite, and uncertain that the courts are unable, by accepted rules of construction, to determine, with any reasonable degree of certainty, what the Legislature intended, or which is so incomplete or conflicting and inconsistent in its provisions that it cannot be executed, will be declared to be inoperative and void.”

A very large number of authorities from nearly every jurisdiction in the land uniformly hold that it is a violation of the constitutional rights of the owner of private property or of a lawful private business not imbued with a “public interest” for the state to attempt to regulate the business or fix the selling price of the property, unless it becomes necessary to do so under police power for the health, peace, or welfare of the public. It is just as grave an interference with these inherent property rights to arbitrarily fix a minimum or a maximum price beyond which private property may not be sold, as to definitely fix an absolute price at which every article of a mercantile stock may be sold. In Ribnik v. McBride, 277 U.S. 350, 48 S.Ct. 545, 546, 72 L.Ed. 913, 56 A.L.R. 1327, it is said, “The fixing of prices for food or clothing, of house rental or of wages to be paid, whether minimum or maximum, is beyond the legislative power.” The principle is the same. Numerous authorities hold that grocery stores and kindred enterprises are not imbued with a “public interest” which authorizes price fixing or regulation. Nor, under ordinary circumstances may it be said it is necessary for the public welfare to thus interfere with private business or private property. Such interference is destructive of the constitutional inhibition and of private inherent rights to own and control property. Among the numerous cases which hold that an attempt to regulate an ordinary private business is unconstitutional are the following authorities: New State Ice Co. v. Liebmann, 285 U.S. 262, 52 S.Ct. 371, 76 L.Ed. 747; Williams v. Standard Oil Co., 278 U.S. 235, 49 S.Ct. 115, 73 L.Ed. 287, 60 A.L.R. 596; Ribnik v. McBride, supra; Wolff Packing Co. v. Court of Industrial Relations, 262 U.S. 522, 43 S.Ct. 630, 67 L.Ed. 1103, 27 A.L.R. 1280; Tyson & Brother United Theatre Ticket Officers, Inc. v. Banton, 273 U.S. 418, 47 S.Ct. 426, 71 L.Ed. 718, 58 A.L.R. 1236; Ex parte Dickey, 144 Cal. 234, 77 P. 924, 66 L.R.A. 928, 103 Am.St.Rep. 82, 1 Ann.Cas. 428; People v. Pace, 73 Cal.App. 548, 238 P. 1089; Ex parte Kazas, Cal.App., 70 P.2d 962; 2 Cooley's Constitutional Limitations, 8th Edition, p. 1300.

In holding a section of the Penal Code, prohibiting the operating of a barbershop on Sunday, to be unconstitutional, our Supreme Court said in Ex parte Jentzsch, 112 Cal. 468, 44 P. 803, 804, 32 L.R.A. 664, with respect to legislative interference with lawful business under the guise of the police powers: “So, while the police power is one whose proper use makes most potently for good, in its undefined scope and inordinate exercise lurks no small danger to the republic; for the difficulty which is experienced in defining its just limits and bounds affords a temptation to the legislature to encroach upon the rights of citizens with experimental laws none the less dangerous because well meant.”

Since the decision of the Jentzsch Case in 1896, the Legislature and municipalities have repeatedly enacted similar statutes and ordinances purporting to remedy abuses in the conduct of private business with relation to the time and manner of the operation thereof. These acts were adopted under a claim that they were authorized by the police powers of the state. More than a score of them have been held to be invalid on the ground that they had no reasonable application to the police power doctrine. The modern method of extending paternal control over private business and property is to reinforce the police power with the theory of a present emergency.

It must be conceded it is often difficult to determine whether the particular facts of a case warrant the regulation of private business or property under police powers. There appears to be no doubt the present action does not come within the authorized police powers of the Legislature.

In holding that a New York statute was unconstitutional which attempted to fix a maximum price for which the owner of tickets for admission to a theatre might be permitted to sell them, the syllabus in Tyson & Brother United Theatre Ticket Officers, Inc. v. Banton, 273 U.S. 418, 47 S.Ct. 426, 71 L.Ed. 718, 58 A.L.R. 1236, correctly states the determined principles affecting price fixing of private property as follows:

“The right of the owner to fix a price at which his property shall be sold or used is an inherent attribute of the property itself, and as such within the protection of the due process clauses of the Federal Constitution.

“The power of the government to fix prices does not ordinarily exist in respect to merely private property or business, but exists only where the business or property involved has become affected with a public interest.”

In the case last cited it is further said: “There is no legislative power to fix the prices of provisions or clothing or the rental charges for houses or apartments, in the absence of some controlling emergency.”

Clearly section 3 of the act in question infringes upon the constitutional right of individuals to own, control, and dispose of private property without legislative interference. It appears to be an effort to unlawfully fix minimum prices at which all articles or products, services and output of trade may be sold by persons, firms, corporations, or associations engaged in business. That is contrary to the “due process” clause of the Federal Constitution. Since the adoption of the Federal Constitution, the right to engage in lawful pursuits and business and the right to own and control private property have been jealously guarded in America. An unbroken line of authorities upholds that valuable principle. It is the duty of courts to protect individuals, firms, and corporations against unlawful encroachments by legislative enactments upon those vested rights, even though they be adopted in the guise of police regulations. In the case of Powell v. Pennsylvania, 127 U.S. 678, 8 S.Ct. 992, 995, 1257, 32 L.Ed. 253, Mr. Justice Harlan said in that regard: “The main proposition advanced by the defendant is that his enjoyment upon terms of equality with all others in similar circumstances of the privilege of pursuing an ordinary calling or trade, and of acquiring, holding, and selling property, is an essential part of his rights of liberty and property as guarantied by the fourteenth amendment. The court assents to this general proposition as embodying a sound principle of constitutional law.”

Our California Supreme Court declared the same principle in Ex parte Drexel, 147 Cal. 763, 82 P. 429, 2 L.R.A., N.S., 588, 3 Ann.Cas. 878, and in many other decisions.

In accordance with the frequently reiterated assertion of most of the higher courts of our land, that the state may not arbitrarily interfere with inherent personal rights in private business or property by enacting onerous regulations or fixing selling prices, it is said in 2 Cooley's Constitutional Limitations, 8th Edition, p. 1300: “Since then [the proclaiming of the Declaration of Independence] it has been commonly supposed that a general power in the State to regulate prices was inconsistent with constitutional liberty.”

However, under peculiar and extraordinary circumstances, statutes have been upheld which purport to regulate charges for services rendered by warehouses and elevators which to a considerable extent have the exclusive control and monopoly of handling vast commodities. Prominent among these authorities are the famous Chicago Warehouse Cases, Munn v. People of Illinois, 94 U.S. 113, 24 L.Ed. 77, upon which the appellant relies. The statutes in those and similar cases were upheld on the theory that such businesses were quasi public in character, and that they were “affected with a public interest” different in nature from the ordinary private business. Upon that theory public hackmen, draymen, ferrymen, and millers have been held to be subject to reasonable regulations. In the same class are included industries which are engaged in supplying public utilities such as water, light, gas, electric power, railroads, canals, and highway transportation. Where one engages in an exclusive business in the nature of a monopoly or in a special business, the privilege of operating which is conferred upon him by authority of the state, he may be subject to reasonable regulations. The wisdom of the decision in the Chicago Warehouse Cases has been challenged, but it was assumed the warehouse business was imbued with a “public interest” which warranted its regulation. As the author of Cooley's Constitutional Limitations, supra, at page 1303, says regarding those cases, “It seems to have been the view of both courts [State and Federal] in the Chicago Warehouses Cases that the circumstances were such as to give the warehousemen of Chicago, who were the only persons affected by the legislation, a ‘virtual’ monopoly of the business of receiving and forwarding the grain of the country to and from that important point, and by the very fact of monopoly to give their business a public character, affect the property in it with a public interest, and render regulation of charges indispensable.”

It is often difficult to determine just what business is deemed to be affected with a “public interest.” In 2 Cooley's Constitutional Limitations, 8th Edition, p. 1302, it is said: “What circumstances shall affect property with a public interest is not very clear. The mere fact that the public has an interest in the existence of the business, and is accommodated by it, cannot be sufficient, for that would subject the stock of a merchant, and his charges, to public regulation.”

At page 1306 it is stated: “In the following cases we should say that property in business was affected with a public interest: 1. Where the business is one the following of which is not of right, but is permitted by the State as a privilege or franchise. 2. Where the State, on public grounds, renders to the business special assistance, by taxation or otherwise. 3. Where, for the accommodation of the business, some special use is allowed to be made of public property or of a public easement. 4. Where exclusive privileges are granted in consideration of some special return to be made to the public.”

Speaking of the application of the term “public interest” with relation to reasonable regulation of business, the late Chief Justice Taft said in Wolff Packing Company v. Court of Industrial Relations, 262 U.S. 522, 43 S.Ct. 630, 633, 67 L.Ed. 1103, 27 A.L.R. 1280: “It has never been supposed, since the adoption of the Constitution, that the business of the butcher, or the baker, the tailor, the wood chopper, the mining operator, or the miner was clothed with such a public interest that the price of his product or his wages could be fixed by state regulation. It is true that in the days of the early common law an omnipotent parliament did regulate prices and wages as it chose, and occasionally a colonial legislature sought to exercise the same power; but nowadays one does not devote one's property or business to the public use or clothe it with a public interest merely because one makes commodities for, and sells to, the public in the common callings of which those above mentioned are instances.”

Under no stretch of imagination can the ordinary grocery business be considered as “charged with a public interest” as that term is used, for the purpose of upholding the right of the state to regulate the industry or fix the prices of its commodities.

Nor is the case of Max Factor & Co. v. Kunsman, 5 Cal.2d 446, 55 P.2d 177, upon which the appellant strongly relies, authority sustaining the right of the Legislature to regulate an ordinary grocery business, or to fix the prices of its commodities. That case arose under an entirely different act from the one which is involved in this case. It was the Fair Trade Act. Stats.1907, p. 984, and amendments, 3 Deering's Gen.Laws of 1931, p. 4902, Act 8702. Section 1 1/2 of that act, which amendment was adopted in 1933, Stats.1933, p. 793, rendered it unlawful and actionable by any one damaged by the willful sale of any commodity protected by a trade–mark for less than the minimum price for which the vendor had contracted to sell the article. That provision was upheld for the express reason that the manufacturer of certain cosmetics and toilet articles which were lawfully protected by trade–marks is entitled to enforce his contract with vendees of those articles to resell them for not less than an agreed minimum price, for the reason that the manufacturer has a property interest and good will in the commodities which the law of trade–marks is bound to respect. That case did not involve the mere question of legislative authority to fix prices. It is an act to enforce contracts between vendors and vendees in which they agree to maintain specified standards of prices upon trade–marked commodities. We are of the opinion that case has no bearing on the issues which are involved in this case.

Section 1 of the act is also challenged as unconstitutional. Since there is no evidence applicable to that section, it is not necessary for us to consider that problem. People v. Perry, 212 Cal. 186, 298 P. 19, 76 A.L.R. 1331; In re Durand, 6 Cal.App.2d 69, 44 P.2d 367; Heald v. District of Columbia, 259 U.S. 114, 123, 42 S.Ct. 434, 66 L.Ed. 852.

The judgment is affirmed.

Mr. Justice THOMPSON delivered the opinion of the court.

We concur: PULLEN, P. J.; PLUMMER, J.