Opinion
5-2-1955
GENERAL ELECTRIC COMPANY, a corporation, Plaintiff, Appellant and Respondent, v. FEDERAL EMPLOYEES' DISTRIBUTING COMPANY, a corporation, Federal Employees' Distributing Company, a corporation, doing business as FEDCO, et al., Defendants, Federal Employees' Distributing Company, a corporation, Respondent and Appellant. Civ. 20067.
Meserve, Mumper & Hughes, E. Avery Crary, Robert A. Stewart, Jr., and Cromwell Warner, Jr., Los Angeles, for General Electric Co. Butterworth & Smith, Edward L. Butterworth and F. Walton Brown, Los Angeles, for Federal Employees' Distributing Co.
GENERAL ELECTRIC COMPANY, a corporation, Plaintiff, Appellant and Respondent,
v.
FEDERAL EMPLOYEES' DISTRIBUTING COMPANY, a corporation, Federal Employees' Distributing Company, a corporation, doing business as FEDCO, et al., Defendants,
Federal Employees' Distributing Company, a corporation, Respondent and Appellant.
May 2, 1955.
Rehearing Denied May 31, 1955.
Hearing Granted June 29, 1955. *
Meserve, Mumper & Hughes, E. Avery Crary, Robert A. Stewart, Jr., and Cromwell Warner, Jr., Los Angeles, for General Electric Co.
Butterworth & Smith, Edward L. Butterworth and F. Walton Brown, Los Angeles, for Federal Employees' Distributing Co.
DRAPEAU, Justice.
As stated in the preceding opinion, Cal.App., 282 P.2d 941, plaintiff, General Electric Company, brought this action against defendant, Federal Employees' Distributing Company, a corporation, for an injunction forbidding it to sell plaintiff's products for less than the fair trade prices established by plaintiff and its distributors and retail dealers in California.
Plaintiff appeals from a judgment of nonsuit that followed the presentation of its case in the Superior Court.
Defendant cross-appeals from the judgment of nonsuit, and appeals from an order granting a new trial made subsequently to the judgment.
The appeals from the judgment and the order granting a new trial have been consolidated for briefing, argument, and decision in this Court. General Electric Co. v. Federal Employees' Dist. Co., 122 Cal.App.2d 509, 265 P.2d 19.
The substantive law governing this appeal is to be found in sections 16900 et seq. of California's Business and Professions Code, referred to as 'The Fair Trade Act.'
The Fair Trade Act was first held constitutional in Max Factor & Co. v. Kunsman, 1936, 5 Cal.2d 446, 55 P.2d 177, affirmed in 299 U.S. 198, 57 S.Ct. 147, 81 L.Ed. 122. The latest case involving the act, decided by our Supreme Court, is Cal-Dak Co. v. Sav-on Drugs, 1953, 40 Cal.2d 492, 254 P.2d 497.
Many matters have been argued and briefed on these appeals, among them being: the purposes of the Fair Trade Act, the measurer and method of proof of damages for a breach of the law, whether or not there was proof of irreparable injury in this case, the scope and purposes of injunctive relief, asserted errors in ruling upon evidentiary matters at the trial, what are retail sales, and whether or not defendant, by reason of its cooperative character, comes or does not come within the purview of the act.
However, this Court has come to the conclusion that there is one feature in this case that, at the threshold of its consideration, compels affirmance of the judgment and reversal of the order granting a new trial. Having come to that conclusion it would serve no useful purpose to comment in this opinion upon the many other matters urged in support of, or for reversal of the judgment and the order.
Section 16902 of the Code permits agreements by producers with buyers that such producers' commodities will not be sold at retail for prices less than stipulated by the producer. Only three exceptions to such fixed sales prices are permitted: (1) In closing out an owner's stock; (2) In selling damaged goods, or goods deteriorated in quality; and, (3) in selling by any officer acting under the order of a court.
Section 16904 provides that sales contrary to such minimum contract prices are 'actionable at the suit of any person damaged thereby.' That phrase contemplates application of the equitable remedy of injunction. Cal-Dak Co. v. Sav-on Drugs, supra, 40 Cal.2d 492, 254 P.2d 497. And it matters not whether such sales are made by parties to the contract or not. Cal-Dak Co. v. Sav-on Drugs, supra.
But in this case the contract upon which plaintiff rests its whole case contains the following exceptions: 'The indicated retail prices do not apply to sales made to employees of the General Electric Company or to sales by distributors or dealers of these products to their own employees, or to sales to governmental agencies or to commercial or institutional establishments buying for their own use and not for resale.'
Carried to their logical conclusion these exceptions nullify the purpose and intent of the Fair Trade Act.
All laws of a general nature shall have a uniform operation. Const. Art. I, Sec. 11. Legislative discretion may not be delegated. State Board of Dry Cleaners v. Thrift-D-Lux Cleaners, 40 Cal.2d 436, 254 P.2d 29. A statute is discriminatory if it confers particular privileges on a class arbitrarily selected from a large number of persons, all of whom stand in the same relation to privileges granted and between whom and those not favored no reasonable distinction can be found. Franchise Motor Freight Ass'n v. Seavey, 196 Cal. 77, 235 P. 1000. A law is a 'special law' and unconstitutional if it confers particular privileges in the exercise of a common right upon a group arbitrarily selected. Communist Party of United States v. Peek, 20 Cal.2d 536, 127 P.2d 889.
So, bearing in mind the constitutional limitation of legislative power, it becomes evident that it was not the intention of the Legislature in enacting the Fair Trade Act to authorize producers of commodities to divide their customers into classes and to provide by contract that one or more favored classes may buy such commodities at cut-rate prices and that others must pay the minimum prices stipulated in the contract. And the powers of equity may not be invoked to enforce such contracts.
Therefore, that part of the judgment of the Superior Court reading as follows is supported by the indisputed facts in this case:
'that plaintiff's evidence disclosed that plaintiff was not entitled to the discretionary remedy of injunction by reason of the fact that such evidence showed that plaintiff had failed to enforce uniformly its minimum fair trade prices and had inequitably discriminated in favor of large classes of consumers and had not subjected them to its fair trade price restrictions,'
While an order granting a new trial should be affirmed if there is any ground upon which it might properly have been made, yet when neither pleadings nor proof as a matter of law will support a case it becomes the duty of a court of review of reverse the order and put an end to the litigation. The wide discretion allowed to the Superior Court on motions for a new trial will not justify the granting of such motions where in its findings and judgment the court reached the only conclusion that could properly have been reached on the record. Mercantile Trust Co. v. Sunset Road Oil Co., 176 Cal. 461, 168 P. 1037; Mazzotta v. Los Angeles Ry. Corp., 25 Cal.2d 165, 153 P.2d 338.
The judgment is affirmed, and the order granting a new trial is reversed.
WHITE, P. J., and DORAN, J., concur. --------------- * Opinion vacated 291 P.2d 942.