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State v. Walgreen Drug Co.

Supreme Court of Arizona

May 20, 1941

THE STATE OF ARIZONA, Appellant,
v.
WALGREEN DRUG CO., a Corporation, Appellee

APPEAL from a judgment of the Superior Court of the County of Maricopa. Arthur T. LaPrade, Judge. Judgment affirmed.

Mr. Joe Conway, Attorney General, and Mr. Earl Anderson, Special Assistant Attorney General, for Appellant.

Mr. Charles Bernstein, for Appellee.

Messrs. Snell & Strouss, Mr. Mark Wilmer and Mr. George M. Hill, Amici Curiae.

OPINION

Page 651

[57 Ariz. 310] LOCKWOOD, C.J.

The State of Arizona, plaintiff, filed this action in the superior court of Maricopa County against Walgreen Drug Co., a corporation, defendant. The complaint set forth in substance that defendant had repeatedly violated the provisions of chapter 39, session laws of Arizona, 1939, commonly known as the "Unfair Sales Act," and asked for an injunction against defendant

Page 652

forbidding it from offering to sell any commodities below cost "as said cost is defined by the said chapter 39, session laws of Arizona, 1939, except as said sales may be allowed under the exemptions contained in section 6 of said chapter 39." Defendant moved to dismiss the action because the complaint failed to state facts upon which injunctive relief could be granted. The court, after consideration thereof, granted the motion and the action was dismissed, whereupon the matter was brought before us for review.

The real question before us is whether chapter 39, supra, is a constitutional and valid exercise of the power of the legislature. The chapter declares the policy and purpose of the chapter in section 7 thereof, as follows:

"Declaration Of Policy And Purpose. It is hereby declared that the practice of selling certain items of merchandise below cost in order to attract patronage is generally a form of deceptive advertising and an unfair method of competition in commerce. Such [57 Ariz. 311] practice causes commercial dislocations, misleads the consumer, works back against the farmer, directly burdens and obstructs commerce, and diverts business from dealers who maintain a fair price policy. Bankruptcies among merchants who fail because of the competition of those who use such methods result in unemployment, disruption of leases, and non-payment of taxes and loans, and contribute to an inevitable train of undesirable consequences, including economic depression, and it is hereby declared to be the policy of this state to protect the well-being of its citizens through the prevention, suppression and elimination of unfair methods of competition. The purpose of this act is to carry out such policy in the public interest."

The legislature then, in section 3 of the chapter, declared certain acts to be a violation of the policy, as follows:

"Unfair Sales And Competition. It is hereby declared that any advertising, offer to sell, or sale of any merchandise, either by retailers or wholesalers, at less than cost as defined in this act, with the intent, or effect, of inducing the purchase of other merchandise, or of unfairly diverting trade from a competitor or otherwise injuring a competitor, impair and prevent fair competition, injure public welfare, and are unfair competition and contrary to public policy and the policy of this act, where the result of such advertising, offer or sale is to tend to deceive any purchaser or prospective purchaser, or to substantially lessen competition, or to unreasonably restrain trade, or to tend to create monopoly in any line of commerce."

And in sections 4 and 5 provided two methods of enforcing it, one by a criminal prosecution, and the other by injunction, the latter being the course ...


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