Majority
Defendant appeals in an action by the People to enjoin certain alleged violations of the Unfair Trade Practices Act (Bus. & Prof. Code, § 17000 et seq.) to wit, the selling of articles or products at less than cost in the manner prohibited in section 17043 of that code and the practice of using articles or products as “loss leaders” prohibited in section 17044. The court granted without notice to defendant a temporary restraining order dated February 15, 1950. Defendant’s motion to dissolve said order was denied after hearing on February 20, 1950. On April 3, 1950, after further hearing an order was entered in the minutes reading:
11 Cause herein, having been heretofore heard and submitted, the Court now makes its order granting a Preliminary in-junction to enjoin the defendant from selling below invoice or replacement cost, whichever is lower, subject to the exceptions on ‘below cost’ sales as set forth in the Business & Professional Code, Section 17050.”
On April 13, 1950, notice of appeal from said three orders
From this formal injunction defendant appealed separately on June 30, 1950, which appeal is numbered 14696. The two appeals were consolidated by order of the court.
The first question presented is whether the minute order of April 3, 1950 or the formal order of May 24th is the final and appealable decision. Appellant contends that, as the minute order contained no direction for the preparation of a written order and no findings were required, this order under rule 2(b) (2) of the Rules on Appeal finally disposed of the plaintiff’s application and that the formal preliminary injunction is to be disregarded as a nullity, citing Pessarra v. Pessarra, 80 Cal.App.2d 965 [ 183 P.2d 279 ]. Such would certainly be the case if the court could validly dispose of the application for a preliminary injunction by the minute order. In Eisenberg v. Superior Court, 193 Cal. 575 , 579 [ 226 P. 617 ], the Supreme Court citing from Holtum v. Grief, 144 Cal. 521 , 525 [ 78 P. 11 ], said: “ ‘The decision of the trial court having been once made after regular submission of the motion its power is exhausted—it is functus officio.’ ” (See, also, Holden v. California Emp. etc. Com., 101 Cal.App.2d 427 , 430 [ 225 P.2d 634 ]; 14 Cal.Jur. 283.) Moreover the appeal taken from the minute order would at any rate have divested the trial court of further jurisdiction in the same matter (Sacks v. Superior Court, 31 Cal.2d 537 , 540 [ 190 P.2d 602 ]). However the question remains whether the trial court could make its decision by a minute order or whether it could act only by making a formal written order. “The problem is one of trial court procedure, independent of the Rules on Appeal, since Rule 2, prescribing the time to file notice of appeal, does not come into operation until there is an appealable judgment or order.” (Gwinn v. Ryan, 33 Cal.2d 436 , 437 [ 202 P.2d 51 ].) In Wheeler v. Superior Court, 82 Cal.App. 202 [ 255 P. 275 ], where also there was a minute order and a written order for a temporary injunction it was' held that the minute order, incomplete as to the term/s, could not be the
Appellant attacks the injunction on the ground of unconstitutionality of the provisions of the Unfair Practices Act on which it is based. It is contended that the Unfair Practices Act violates the commerce clause of the federal Constitution because it necessarily establishes floors for prices of goods, affects the quantity of interstate shipments, and therefore constitutes a burden on interstate commerce. It is contended, but with insufficient reference to the record, that the commodities specified in the complaint as having been sold below cost had moved in interstate commerce. Even if we assume that the goods here involved had so moved the contention is without merit. To invalidate a state statute under the commerce clause more is required than such vague generalities. The Unfair Practices Act does not purport to regulate interstate commerce but was passed in the exercise of the state police power and was held by our Supreme Court to be a legitimate and reasonable exercise of that power. (See Wholesale T. Dealers Bureau v. National Etc. Co., 11 Cal.2d 634 , 643 [ 82 P.2d 3 , 118 A.L.R. 486 ], where the purpose of the act is also analyzed.) In United States v. Food & Grocery Bureau of Southern Calif., 43 F.Supp. 966 , 972, it is said with respect to said act: “Certain it is that a State may within its boundary, regulate trade practices, so as to prevent unhealthy competition.” In Parker v. Brown, 317 U.S. 341 ,
However, appellant further argues that the act conflicts with the policy of the Sherman Act, by which Congress is said to have asserted its power in the field. Recently the United States Supreme Court in Schwegman Brothers v. Calvert Distillers Corp., 341 U.S. 384 [ 71 S.Ct. 745 , 95 L.Ed. 1035 , 19 A.L.R.2d 1119 ] held the nonsigner provision of a Fair Trade Act invalid with respect to goods in interstate commerce because they constituted minimum price fixing violating the Sherman Act and not permitted by the Miller Tydings Act. However our Unfair Practices Act must be distinguished from the Fair Trade Act in that the former is not a price fix
Appellant further argues that he would commit a violation of the Sherman Act if he should investigate the legal prices of his competitors, to find out which prices he may meet pursuant to section 17050.(d), Business and Professions Code. The federal cases cited by appellant for this proposition do not hold anything of the kind. They hold that price fixing under the guise of interchanging price reports violates the Sherman Act. The rule in this respect is most clearly expressed by Chief Justice Taft in the latest case cited by appellant, Sugar Institute v. United States, 297 U.S. 553 [ 56 S.Ct. 629 , 80 L.Ed. 859 ] : “Dissemination of information is normal
Appellant’s contention that the provision of section 17050 subdivision (d) violates due process because of the indefiniteness of the standard set, for which contention Commonwealth v. Zasloff, 338 Pa. 457 [ 13 A.2d 67 , 128 A.L.R. 1120 ] is cited, has been expressly rejected by our Supreme Court in People v. Pay Less Drug Store, 25 Cal.2d 108 , 117 [ 153 P.2d 9 ], where the difference between the California statute and the one under consideration in the Zasloff case is pointed out.
Finally appellant contends that both the Unfair Practices Act as such and the manner of its application to appellant in this ease violate the “Equal Protection Clause” of the 14th Amendment of the United States Constitution.
The unconstitutionality of the act on that ground is argued -without citation of any authority on the ground that large chain stores can purchase at lower price than individual grocers, who are prevented from competing with these larger concerns because they may not sell below their own higher costs. This reasoning was rejected with respect to the requirement of uniform operation of article I, section 11 of the California Constitution in Wholesale Tobacco Dealers Bureau v. National etc. Co., supra, 11 Cal.2d 634 , 661, where it is said: “If there is any theoretical ‘discrimination’ resulting from the statute it is due to the very fact that the law is uniform in its operation, and does not classify.” Moreover according to that decision the danger of unequal effect mentioned by appellant is remedied in the statute itself “by exempting from operation of the statute, any endeavor made in good faith to meet the legal price of competitors.” The latter argument seems decisive also with respect to the equal protection clause of the 14th amendment, -without necessity to investigate whether without such provision the statute would violate that clause.
The unconstitutional manner of application is predicated on the contention that appellant only was sued for violation of
Appellant’s next major contention is that there is no substantial evidential support for the granting of a preliminary injunction. It is said that there was no substantial evidence that appellant acted “for the purpose of injuring competitors or destroying competition” as required by section 17043 and that there was no clear proof of injurious effect of his acts which according to section 17071 is presumptive evidence of said purpose, and further that the People had not proved that the. competitor’s prices which appellant showed that he was meeting were not legal prices of such competitors.
It was stipulated that defendant sold several groceries under his invoice or replacement cost. The verified complaint alleges ‘ ‘ That said items of food and groceries and commodities were and now are being sold by said defendants in the ordinary course of business for the purpose of injuring competitors and destroying competition. That as a result of said sales, competitors of said defendants were injured, and are now being injured; and competition has been and is now being destroyed.” Defendant denied this and stated in his affidavit that the sales have been made “in good faith to meet the achial prices of a competitor or competitors ...” It would seem that the following language from People v. Black’s Food Store, 16 Cal.2d 59 , 61-62 [ 105 P.2d 361 ], also a case under the Unfair Practices Act is directly applicable: “The authorities are numerous and uniform to the effect that the granting or denial of a preliminary injunction on a verified complaint, together with oral testimony or affidavits, even though the evidence with respect to the absolute right therefor may be conflicting, rests in the sound discretion of the trial court, and that the order may not be interfered with on appeal, except for an abuse of discretion. (Citations.)
“In the present case the applications for temporary injunctions were heard on the verified complaints which specifi
In our case there was over and above the verified complaint an expert affidavit of Robert W. Hess, a competitor, to the effect that below cost sales and loss leaders are employed to divert trade from competitors to the actor and thereby injure competitors, that only larger merchants can take the loss on certain types of merchandise and make up from the increased sale on other items and that therefore the practice tends to eliminate small business from competition. Some oral evidence was to the same effect. The direct evidence of injury to competitors was not strong. One competitor (Maehl) testified that the practice had caused a reduction of 1% per cent in markup and a corresponding reduction in net profit mostly caused by defendant as one of the principal advertisers. Another competitor (Hergert) testified that he had lost customers to defendant Gordon. Hess, whose affidavit was mentioned above, testified that the advertised bargains caused his clients not to purchase such items in his store. Shopping lists picked up in his store showed that the customers bought Gordon’s special items. The purchases of one steady customer decreased from around $150 to less than $50 a month. The witness Pieracci who had testified to the same effect as the affidavit of Hess retracted and testified that efficient small operators could withstand below price selling and that nobody in defendant’s area went out of business. It cannot be said that it was an abuse of discretion to hold on the basis of such evidence for the purpose of granting a preliminary injunction that the required intent to injure competitors or destroy competition was present. Moreover, appellant has the burden of showing an abuse of discretion (Remillard Brick Co. v. Dandini, 47 Cal.App.2d 63 [ 117 P.2d 432 ]) and his contention that the preliminary injunction is not supported by substantial
With respect to the question whether appellant came under the exception of section 17050(d) permitting sales below cost made “In an endeavor made in good faith to meet the legal prices of a competitor selling the same article or product etc.” it must be noted that appellant did not contend that he was meeting the legal prices of a competitor but that he was meeting the actual prices of competitors. This evidently intentional deviation from the statutory language indicates that appellant wholly disregarded the question of the legality of the low prices of his competitors and it negatives good, faith in that respect. The prices of some of his competitors, which he allegedly was meeting, and who were called as witnesses by him, proved to be below cost, and no evidence was introduced showing that these prices came under an exception which caused them to be legal. The trial court could therefore correctly hold that appellant had not brought himself under the exception of section 17050(d).
Appellant contends that a positive showing by the People that the prices which he tried to meet were not legal is required, the burden of proof of the exclusion of the exception being on the plaintiff. As authority appellant cites 49 Corpus Juris 153, which however reads in part: “Where a party relies on a statute which contains an exception in the enacting clause, or clause creating and defining the right or liability asserted, such exception must be negatived in the initial pleading, but where the exception occurs in a proviso or in a subsequent section of the act, such exception is matter of defense and need not be negatived.” As the exception here involved is separately stated in a later section, the quoted text shows that the exception is a matter of defense which need not be negatived or disproved by plaintiff. Accordingly People v. Pay Less Drug Store, supra, 25 Cal.2d 108 , 114, states that if sales below cost with the requisite intent are shown defendants are required to go forward with such proof as would bring them within one of the exceptions. Green v. Grimes-Stassforth S. Co., 39 Cal.App.2d 52 [ 102 P.2d 452 ], cited by appellant for the contrary position is a case of insufficient allegations of one of the requirements provided for in the section itself.
Although we find no error or abuse of discretion in the granting of a preliminary injunction appellant’s conten
Appellant urges that also the appeal relating to the temporary restraining order and to the order denying the motion to dissolve it requires consideration. It has been held with respect to preliminary injunctions that they merge in the permanent injunction and that no appeal could be taken from the order granting the preliminary injunction after the permanent injunction had been granted. (Sheward v. Citizens’ Water Co., 90 Cal. 635 , 638 [ 27 P. 439 ].) Such appeal will have to be dismissed, certainly when the permanent injunction is affirmed on appeal. (Southern California Railway Co. v. Workman, 146 Cal. 80 , 86 [ 79 P. 586 , 82 P. 79 , 2 Ann.Cas. 583] ; County of Tehama v. Sisson, 152 Cal. 167 , 179 [ 92 P. 64 ].) The same position is taken in Knight v. Cohen, 5 Cal.App. 296 , 301 [ 90 P. 145 ] with respect to the situation actually present in this case, to wit, appeal from a temporary restraining order and order denying a motion to discharge it after a preliminary injunction has been granted.
As modified said preliminary injunction dated May 24,1950, is affirmed, the appeals of all other orders appealed from are dismissed, each party to bear its own costs on the consolidated appeals.
The writ of supersedeas granted by the court on October 13, 1950, until the further order of this court, is dissolved.
Goodell, J., and Dooling, J., concurred.
Cases cited
- Pessarra v. Pessarra 80 Cal.App.2d 965 p. 715
- Eisenberg v. Superior Court 193 Cal. 575 at 579 p. 715
- Holtum v. Greif 144 Cal. 521 at 525 p. 715
- Holden v. California Employment Stabilization Commission 101 Cal.App.2d 427 at 430 p. 715
- Sacks v. Superior Court 31 Cal.2d 537 at 540 p. 715
- Gwinn v. Ryan 33 Cal.2d 436 at 437 p. 715
- Wheeler v. Superior Court 82 Cal.App. 202 p. 715
- Wutchumna Water Co. v. Superior Court 215 Cal. 734 at 737 p. 716
- Hirschberg v. Oser 82 Cal.App.2d 282 at 287 p. 717
- Wholesale Tobacco Dealers Bureau of Southern California, Inc. v. National Candy & Tobacco Co. 11 Cal.2d 634 at 643, at 661, at 658 p. 717, p. 719, p. 720, p. 725
- Parker v. Brown 317 U.S. 341 p. 717, p. 718
- Southern Pacific Co. v. Arizona ex rel. Sullivan 325 U.S. 761 at 770 p. 718
- Schwegmann Bros. v. Calvert Distillers Corp. 341 U.S. 384 p. 718
- Sugar Institute, Inc. v. United States 297 U.S. 553 p. 719
- People v. Pay Less Drug Store 25 Cal.2d 108 at 117, at 114 p. 720, p. 724
- Yick Wo v. Hopkins 118 U.S. 356 p. 721
- Brock v. Superior Court 12 Cal.2d 605 at 610 p. 721
- Downing v. California State Board of Pharmacy 85 Cal.App.2d 30 at 36 p. 721
- Wade v. City & County of San Francisco 82 Cal.App.2d 337 at 339 p. 721
- Sunday Lake Iron Co. v. Township of Wakefield 247 U.S. 350 p. 721
- People v. Black's Food Store 16 Cal.2d 59 at 61-62 p. 722
- Remillard Brick Co. v. Dandini 47 Cal.App.2d 63 p. 723
- Sutro Heights Land Co. v. Merced Irrigation District 211 Cal. 670 at 787 p. 724
- Metzenbaum v. Metzenbaum 96 Cal.App.2d 197 at 199 p. 724
- Green v. Grimes-Stassforth Stationery Co. 39 Cal.App.2d 52 p. 724
- Gelfand v. O'Haver 33 Cal.2d 218 at 222 p. 725
- Morris v. George 57 Cal.App.2d 665 at 677 p. 725
- Sheward v. Citizens' Water Co. 90 Cal. 635 at 638 p. 725
- Southern California Railway Co. v. Workman 146 Cal. 80 at 86 p. 725
- County of Tehama v. Sisson 152 Cal. 167 at 179 p. 725
- Knight v. Cohen 5 Cal.App. 296 at 301 p. 725