On certified appeal from the Chancery Division to the Appellate Division of the Superior Court.
For affirmance -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Wachenfeld, Burling, Jacobs and Brennan. For reversal -- None. The opinion of the court was delivered by Heher, J. Oliphant, J. (concurring). Mr. Justice Burling desires me to state that he joins in this concurring opinion.
[15 NJ Page 205] We inquire here as to whether the use of plaintiff's long-established trading stamp discount system by retailers of motor fuel would constitute a violation of L. 1938, c. 163, as amended by L. 1939, c. 62, and L. 1952, c. 258, N.J.S.A. 56:6-2, directing: (a) the posting as therein provided of the price per gallon of motor fuel sold by such retailers from a pump or other dispensing equipment, including all taxes, state and federal, levied on the "manufacture or sale" of the fuel, which "shall remain posted and in effect for a period of not less than twenty-four hours"; (b) enjoining retail dealers against selling motor fuel "at a price which is below the net cost of such motor fuel to the retail dealer plus all selling expenses," and forbidding on pain of specific penalties the sale of such fuel "at any other price than the price, including tax, so posted," and the implementing provision (e) that no "rebates, allowances, concessions or benefits shall be given, directly or indirectly,
so as to permit any person to obtain motor fuels from a retail dealer below the posted price or at a net price lower than the posted price applicable at the time of the sale."
Judge Goldmann concluded that the use of such cash discount stamps according to plaintiff's system would not constitute a "rebate," "allowance," "concession," or "benefit" within the ban of subdivision (e) of the cited section 56:6-2, and, moreover, that on the contrary hypothesis this statutory provision must be deemed an arbitrary, discriminatory and unreasonable interference with a private business, and therefore unconstitutional. 25 N.J. Super. 568 (Ch. Div. 1953).
The case is here by our certification, on plaintiff's motion, of an appeal taken by defendants to the Appellate Division of the Superior Court.
Such use of plaintiff's discount stamps is not within the letter of the statutory interdiction; nor would it be inimical to the reason and spirit of the act. Of this there can be no doubt when the legislative policy and purpose are related to the chosen means of fulfillment.
We are not here concerned with the conventional price-fixing law. The retailer himself may determine the sale price of the fuel, though he is enjoined not to sell below cost plus selling expenses; he is required to post the price on the pump or other dispensing equipment, but he is free to change the price every 24 hours; the statute directs only that the posted price shall remain in force for not less than that period. N.J.S.A. 56:6-2 (a), (b). Subdivision (e) is a measure designed to implement and prevent evasion of the prior injunction against sales of the particular commodity at a price other than the price posted. To this end, it forbids "rebates," "allowances," "concessions" or "benefits," either directly or indirectly, making for sales "below the posted price or at a net price lower than the posted price applicable at the time of the sale." But these are terms that in their natural sense and significance do not import the cash discount that long has been familiar practice in general merchandising as representative of the value of the immediate use of the price of the commodity as compared to the
deferred payment. The words take color from one another and from the context.
Plaintiff's "cooperative discount system" is in aid of what has come to be the normal cash discount and the only practical means to that end where there are intermittent purchases in small lots. Sperry & Hutchinson Co. v. McBride, 307 Mass. 408, 30 N.E. 2 d 269, 131 A.L.R. 1254 (Sup. Jud. Ct. 1940). Not long after the inception of the device, it was judicially assessed as "merely one way of discounting bills in consideration for immediate payment in cash, which is a common practice of merchants, and is doubtless a popular method, and advantageous to all concerned, and it is not obnoxious to public policy." Ex parte Hutchinson, 137 F. 949 (C.C.D. Wash. 1904). Although the business is now country-wide, there has been no change in mode or method that has materially altered this concept.
As Judge Goldmann has said, the "S. & H." trading stamps have been in use throughout the country for more than 50 years, as a means of providing a cash discount comporting with standard in the form of merchandise when the issued stamps represent cash purchases of $120 in the aggregate, the equivalent of a discount of 1.66% when the stamps are redeemed directly by the merchant, and 2.08% when redeemed by the plaintiff corporation, seemingly alternative courses at the option of the holder of the stamps, although we do not suggest that option is of the essence in this regard. Thereby, the purchaser is given the benefit of the traditional cash discount; and the merchant-licensee has the reciprocal advantage of trade with the frugal shopper who is attracted by the saving. But the discount is measured by the economic worth to the merchant of the prompt use of the money and the corresponding reduction in working capital requirements and the avoidance of the expense of maintaining credit facilities and the inevitable losses from bad ...