SCHAUER, J., Dissenting. — The practice of permitting a manufacturer (at least absent any contractual relationship) to arbitrarily fix a price below which his product may not be sold by one who acquires title to it is basically contrary to the concept of free enterprise under a government dedicated to liberty and freedom and to the protection of private ownership rights wherein even land titles are alodial. As expressed by the court in Union Carbide & Carbon Corp. v. White River Distributors, Inc. (1955),-Ark. - [275 S.W.2d 455, 458], “Full and free competition is the long recognized basis of our economy. Trade-marked articles comprise a large number of the commodities in common use today and it is common knowledge that the number is increasing. . . . We can think of no way in which the public welfare was being jeopardized under the system of free competition prior to 1937 which suggested the necessity or advisability of imposing the [non-signer] restrictions contained in Act 92 [the State’s Fair Trade Act], and we can think of none that exists today. To the contrary, we believe it is generally recognized that the interest of the public is best served by the opportunity to buy [902]commodities in a freely competitive market. We recognize that competition is preserved to a degree under the provisions of the Act, but it must be admitted that it is also restricted to a degree. The Act can be sustained only if it enhances the general welfare and not if it restricts it to only a small extent . . . [We conclude] that the effect of the Act is not to protect the public welfare and therefore violates our Constitution.”
And in Georgia the court, in striking down as unconstitutional the nonsigner provisions of the State’s Fair Trade Act, declared in Cox v. General Electric Co. (1955), 211 Ga. 286 [85 S.E.2d 514, 519], that “We are here . . . dealing with the statutes of this State and with the question of whether or not they violate the Constitution of the State of Georgia. What the courts of other States have decided is not controlling . . . We are also familiar with the modern trend to allow the government to encroach more and more upon the individual liberties and freedoms. So far as we are concerned, we will not strike down the Constitution of our State for this purpose . . . The scheme described in the petition now under consideration permits a manufacturer, under the guise of protecting his property rights in a trade name and trademark, to control the price of his product down through the channels of trade into the hands of the ultimate consumer, and into the hands of persons with whom he has no contractual relation whatever. This statute clearly violates the provisions of the due-process clause of the Constitution of the State of Georgia.”1 (See also Grayson-Robinson Stores v. Oneida, Ltd. (1953), 209 Ga. 613 [75 S.E.2d 161, 165]; McGraw Electric Co. v. Lewis & Smith Drug Co. (1955), 159 Neb. 703 [68 N.W. 2d 608, 616-618]; Liquor Store, Inc. v. Continental Distilling Corp. (1949, Fla.), 40 So.2d 371, 374-375; Shakespeare Co. v. Lippmam’s Tool Shop Sporting Goods Co. (1952), 334 Mich. 109 [54 N.W.2d 268].)
In Liquor Store, Inc. v. Continental Distilling Corp. (1949, Fla.), supra, it was likewise concluded “that the [Fair Trade] act is arbitrary and unreasonable and violates the right to own and enjoy property; one economic group may not have the sovereign power of the state extended to it and use it to the detriment of other citizens. In that ease the legislation serves a private rather than a public purpose. The sovereign [903]power must not be delegated to a private citizen to be used for a private purpose and especially where there is no state supervision.”
It is my view that the nonsigner provisions of the California Fair Trade Act (Bus. & Prof. Code, § 16904) are similarly aribtrary, unreasonable and violative of the due process clause of the Constitution of California. (Canst., art. I, § 13,2 see also § 1.)
That price-fixing practices would be contrary to the generally declared public policy in the absence of specific authorization is recognized by this court in both Max Factor & Co. v. Kunsmam, (1936), 5 Cal.2d 446, 455 [55 P.2d 177], and in Scovill Mfg. Co. v. Skaggs Pay Less Drug Stores, ante, p. 881 [291 P.2d 936] (S. F. 19068). In the latter case it is stated (ante, p. 884), “The sales contemplated . . . are transactions which have a substantial effect upon interstate commerce, and in the absence of federal statutory exemptions. the contracts imposing fair trade arrangements on such transactions would be in violation of the Sherman Anti-Trust Act. (26 Stats. 209 [1890].) However, the Miller-Tydings Amendment thereto (50 Stats. 693 [1937] ; 15 U.S.C.A.,§§ 1-7) provides for such an exemption in the case of voluntary arrangements and in the McGuire Act (66 Stats. 632 [1952]; 15 U.S.C.A., § 45 [a]) Congress extended the exemption to non-signer provisions of such contracts entered into pursuant to state statutes.”
In the Scovill case the majority of this court rely heavily upon the Max Factor decision. A basis of that decision was the alleged cutting of prices to the point where sales of certain trademarked products were being made at a loss, a situation which as a matter of common knowledge was generally brought about by severely depressed economic conditions. The avoidance of such price-cutting practices was said to be promotive of public welfare. This statement must be understood to have been used in the light of the economic conditions then existing. However, it is plain that a prop upon which a so-called fair trade law could be sustained during the meager days of the 1930’s would not necessarily be persuasive now. All manner of ideas were conceived during that period, in desperate moves to help the ailing economy. The Fair Trade Act was a product of that condition (see [904]Liquor Store, Inc. v. Continental Distilling Corp. (1949, Fla.), supra, 40 So. 2d 371, 374) and was sustained because of the entirely proper concept that the people should be given a large latitude to experiment within the framework of their Constitution, and ■ that laws which might be sustainable as designed to cope with an emergency would become invalid if sought to be applied under materially different conditions. With the termination of the depression such an act no longer has any proper place in the workings of a free and competitive economy and whether it remains constitutionally tenable is a question which should be reexamined, not held to be concluded by the prior decision.
In the Seovill case this court recognizes that (ante, pp. 885, 886), “It is urged, however, that the changing economic conditions and circumstances since the decision in the Max Factor case as well as experience in the application of fair trade acts since that time have resulted in a general acknowledgment that such legislation no longer serves a proper purpose, and that a trend of recent decisions in other states requires a reexamination of the constitutional questions involved. ... In five states the highest courts have held their fair trade acts to be partially or totally invalid. (Liquor Store, Inc. v. Continental Distilling Corp. (1949, Fla.), 40 So.2d 371; Grayson-Robinson Stores Inc. v. Oneida, Ltd. (1953), 209 Ga. 613 [75 S.E.2d 161] ; Shakespeare Co. v. Lippman’s Tool Shop Sporting Goods Co. (1952), 334 Mich. 109 [54 N.W.2d 268] ; McGraw Electric Co. v. Lewis & Smith Drug Co. (1955), 159 Neb. 703 [68 N.W.2d 608] ; Union Carbide & Carbon Corp. v. White River Distributors, Inc. (1955),-Ark.-[275 S.W.2d 455].) ” The first of the above-quoted decisions (Liquor Store, Inc. v. Continental Distilling Corp.) turned largely upon changing economic conditions. In that case it is further pointed out (p. 375 of 40 So.2d) that when fair trade legislation was first promulgated its purpose was to protect long' established brands which had acquired a substantial value, and that thereafter new brands by the thousands were created to take advantage of the price-fixing privileges thereby secured. (See also Union Carbide & Carbon Corp. v. White River Distributors, Inc. (1955, Ark.), supra, 275 S.W.2d 455, 458.) The fallaciousness of the alleged public welfare purposes of the act is thus further demonstrated.
In the Seovill case the majority notes that various contentions which are now urged against the validity of the Fair Trade Act were not disposed of in the Max Factor case. [905]For example, the attack on the basis of an unlawful delegation of legislative power to fix prices was not there considered, nor did the court take up the problem of indefiniteness of the expression “fair and open competition,” as that phrase is used in the act. In both McGraw Electric Co. v. Lewis & Smith Drug Co. (1955, Neb.), supra, 68 N.E.2d 608, 617-618, and Liquor Store, Inc. v. Continental Distilling Corp. (1949, Fla.), supra, 40 So.2d 371, 375, it was held that fair trade legislation effected an unconstitutional and illegal delegation of price-fixing powers to private parties which even the Legislature itself did not possess as to commodities not affected with a public interest, and particularly was the delegation unlawful in the absence of state supervision of the prices. It is my view that such holdings are based upon sound and long-established constitutional principles and should be followed by this court. Further, this court has held to be fatally vague the expression “reasonable profit” as used in an attempted statutory exception (added by amendment) to the provisions of the Cartwright Act (Bus. & Prof. Code, §§ Í6700-16758) forbidding combinations in restraint of trade. (People v. Building Maintenance, etc. Assn. (1953), 41 Cal.2d 719, 723-726 [264 P.2d 31] ; Speegle v. Board of Fire Underwriters (1946), 29 Cal.2d 34, 46-48 [172 P.2d 867] ; see also Wotton v. Bush (1953), 41 Cal.2d 460, 464, 468 [261 P.2d 256].) The phrase “fair and open competition” appears equally vague and indefinite as it is used in the Fair Trade Act, and thus renders the act vulnerable as an invalid delegation of power as well as a denial of due process. (See Wotton v. Bush, supra, p. 468.)
As noted hereinabove, the fair trade legislation was inspired by and originally sustained because of the greatest economic depression in history. According to the daily press, present economic conditions are the most prosperous that the nation has ever known. The purpose of the petitioner here is to escape disclosing evidence pertaining to its business as related to the commodity in question, in a proceeding in which it is invoking the equitable powers of the court. It is my view that under such circumstances one of the factors which could well be examined by ‘this court in determining whether or not the legislation may properly be further sustained, as well as in determining the equities of petitioner’s claim, is whether it is operating to permit manufacturers, and is being used by this petitioner, to exact arbitrarily high and unreasonable profits, rather than serving its originally [906]avowed purpose of promoting the public welfare. To that end the real party in interest herein seeks to adduce evidence to show the manufacturer’s profit margin in defense to the equitable remedy of injunction sought by the manufacturer as plaintiff in the main action. I agree with the real party in interest that proof of sales of a commodity at an exorbitantly high price in relation to the cost of manufacture would tend to evidence that the commodity is not in fair and open competition, that the Fair Trade legislation protecting such arbitrarily fixed high prices is not promotive of public welfare, and that the manufacturer is using such legislation for unlawful and inequitable purposes and to impose upon the consuming public and upon non-signing retailers an inequitable and illegal price maintenance scheme. It seems to me that the evidence here sought to be adduced is clearly relevant to the issues which the manufacturer has raised by its own request for assistance from a court of equity.
I would deny the writ sought.
Edmonds, J., concurred.
Georgia Constitution of 1945, article 1, section 1, paragraph 3: “No person shall he deprived of life, liberty, or property except by due process of law.”
Const., art. I, $ 13: “. . . No person shall he . . . deprived of life, liberty, or property without due process of law ...”