STATE v. FAIRMONT CREAMERY COMPANY

Minnesota Supreme Court1926-08-27No. No. 25,022

168 Minn. 378

Summary · law.co

Holding. The judgment of conviction for unfair discrimination in buying butterfat is affirmed; the 1923 statute does not violate the Constitution even though it does not require proof of intent to monopolize or destroy competition.

Fairmont Creamery Company was convicted of unlawful discrimination in purchasing butterfat under a 1923 state statute. The company appealed, challenging the constitutionality of the law and arguing it violated established principles requiring that unfair competition statutes include language about intent to create a monopoly or destroy a competitor's business. The court upheld the conviction, distinguishing prior cases that had imposed such intent requirements and finding that the legislature was entitled to prohibit certain discriminatory purchasing practices even without proof of monopolistic intent, provided the statutory basis was not arbitrary or fanciful.

The court reasoned that legislatures may regulate contracts that are not inherently wrongful when necessary to address recognized evils, and that courts cannot strike down a statute unless its foundation is arbitrary or lacks good faith. The court presumed the legislature was informed about conditions in the dairy industry and the problems the statute targeted. The court also rejected the defendant's commerce clause challenge, noting that a prior appellate decision on the same issue remained controlling.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether a statute prohibiting unfair discrimination in purchasing requires proof of monopolistic intent
Whether the legislature may regulate non-wrongful contracts to address recognized evils
Whether the statute violates the commerce clause of the Constitution
Whether the statute's basis is arbitrary or fanciful

Procedural posture

The defendant appealed from an order denying a new trial following conviction of violating the 1923 unfair discrimination statute, after the case had previously been before the court on certified questions.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

DlBELii, J.

The defendant was convicted of unfair discrimination in tbe buying of butter fat as defined by L. 1923, p. 120, c. 120, G. S. 1923, § 3907. The case was here before on certified questions. State v. Fairmont Creamery Co. 162 Minn. 146, 202 N. W. 714, 42 A. L. R. 548. This appeal is from tbe order denying a new trial.

Tbe defendant cites and distinguishes Central Lumber Co. v. South Dakota, 226 U. S. 157, 33 Sup. Ct. 66, 57 L. ed. 164; State v. Bridgeman & Russell Co. 117 Minn. 186, 134 N. W. 496, Ann. Cas. 1913D, 41; State v. Standard Oil Co. 111 Minn. 85, 126 N. W. 527; State v. Fairmont Creamery Co. 153 Iowa, 702, 133 N. W. 895, 42 L. R. A. (N. S.) 821; State v. Drayton, 82 Neb. 254, 117 N. W. 768, 23 L. R. A. (N. S.) 1287, 130 Am. St. 671. Tbe statutes involved in them, taking tbe Minnesota statute involved in tbe Bridgeman & Russell Co. case as fairly typical, and it is, make it an essential element of tbe offense that tbe prohibited sale or purchase be “with tbe intention of creating a monopoly or destroying tbe business of a competitor.” The distinction between such cases and the one before us is so obvious that we need not enlarge upon it. Tbe state does not claim that these cases sustain tbe constitutionality of tbe 1923 statute. If an offense cannot be created by statute unless such or equivalent words are used, or if tbe acts defined by tbe statute as constituting unfair discrimination cannot constitute an offense, tbe conclusion reached on tbe former appeal is in error. And this is tbe troublesome question. We may put aside tbe cases cited as of no controlling value, but useful still as ilustrative of one stage in tbe development of regulation and control.

Tbe state’s contention is that a particular transaction, though in it there inheres no purpose of creating a monopoly or destroying tbe business of a competitor, may be forbidden if tbe evil sought to be repressed cannot be prevented, in the fair judgment of tbe legislature, otherwise. It is for the legislature to find and balance evils, and find and apply the corrective. The basis of the legislation must not be arbitrary or fanciful. The guaranteed right of contract is not absolute; but under the guise of regulation or control the legislature may not engage in arbitrary price-fixing. Examples of lawful interference with contracts, not in themselves wrongful, because recognized evils can be corrected only if such contracts are prohibited, are shown in Booth v. Illinois, 184 U. S. 425, 22 Sup. Ct. 425, 46 L. ed. 623, and Otis v. Parker, 187 U. S. 606, 23 Sup. Ct. 168, 47 L. ed. 323; and less directly in Geer v. Connecticut, 161 U. S. 519, 16 Sup. Ct. 600, 40 L. ed. 793; New York ex rel. v. Hesterberg, 211 U. S. 31, 29 Sup. Ct. 10, 53 L. ed. 75; State v. Shattuck, 96 Minn. 45, 104 N. W. 719, 6 Ann. Cas. 934.

A court cannot strike down a statute unless it can say that its basis is arbitrary or fanciful, or not in good faith and on sufficient grounds directed at the evil. It is presumed that the legislature knew the facts or informed itself. So large is the dairy industry, and of so general distribution throughout the state, that most of the legislators, if they were conversant with conditions in the communities which they represented, knew at first hand the facts of production and marketing of dairy products, and the grievances at which the statute was directed. This is necessarily true of all except the members from the nonagricultural districts; and we must assume that they, if they were not possessed of competent first hand knowledge, informed themselves. We cannot say that the facts justifying such legislation did not exist. The cases are cited in the opinion on the former appeal.

The violation of the commerce clause of the Constitution is again discussed. Since the former appeal there has been decided Shafer v. Farmers Grain Co. 268 U. S. 189, 45 Sup. Ct. 481, 69 L. ed. 909. This has been considered and it does not call for a change of view.

The question of venue is the same as before and we adhere to our prior holding.

All the questions involved have been reconsidered. They are. discussed in our opinion on the former appeal and we need not review them.

Order affirmed.

On October 29, 1926, tbe following opinion was filed.

Per Curiam.

The defendant appeals from a judgment entered on the 22nd day of September, 1926, in the district court of Cottonwood county, finding it guilty of a violation of L. 1923, p. 120, c. 120, and adjudging it to pay a fine of $100. The judgment is affirmed upon the authority of State v. Fairmont Creamery Co. 162 Minn. 146, 202 N. W. 714, 42 A. L. R. 548, and State v. Fairmont Creamery Co. supra, page 378.