Los Angeles Check Sellers Ass'n v. United States National Bank

FILES, P. J. The issue to be determined is whether the issuance of a money order, for a fee, by defendant bank can be a violation of the “sales below cost” and “loss leader” prohibitions of the Unfair Practices Act (Bus, & Prof. Code, §§ 17000,17043,17044).

The case is here on plaintiff’s appeal from a judgment of dismissal entered after the trial court had sustained a general demurrer to a second amended complaint, without leave to amend further.

The complaint alleges in substance the following:

Plaintiff is a trade association whose members are licensed to sell and cash checks and money orders under the Check Sellers and Cashers Law (Fin. Code, § 12000 et seq.). The causes of action of the members have been assigned to plaintiff. Each of the plaintiff’s members sells checks or money orders to the public through agents who are usually independent businesses such as liquor stores, drug stores, food markets and other retail establishments. The public pays fees ranging from 20 to 35 cents per check, depending upon its size. The selling agent retains a portion of that fee as his commission, and the remainder is remitted to the seller. The amount of that commission is determined by bargaining. In practice the seller receives an average of 12 to 15 cents per check.

In March 1966 the defendant, a national banking association, entered into the business of selling money orders to the public through agents in the Los Angeles area. Defendant offers its agents an arrangement whereby defendant receives only 10 cents of each fee and the agent keeps anything over that amount. It is alleged that the 10 cents received by defendant is less than its cost of doing business • that defendant has acted without regard for whether it made a profit and “with wanton and reckless disregard for the harmful injurious effect that said conduct would have upon competition in the money order industry,” and that defendant’s purpose was establishing new bank customers, including the agents themselves, from whom defendant might realize a profit through other aspects of the banking business.

[572]It is further alleged that agents of other cheek sellers are deserting them in order to sell defendant’s money orders at the more favorable commission rate.

The complaint prays an injunction and a recovery of damages.