A & H TRANSP. INC. v. Mayor and City Council of Baltimore

Barnes, J., delivered the opinion of the Court. This is an appeal by the defendant below, Mayor and City Council of Baltimore (City), a municipal corporation, and intervening defendant below, Maryland Association of Petroleum Retailers, Inc. (the Association), a body corporate, from a decree of the Circuit Court of Baltimore City (Cardin, J.) declaring invalid and unconstitutional City Ordinance 735 which, inter alia, prohibits the display of any gasoline price sign other than two eight by ten inch signs affixed to a pump. 1 Further, A. & H. Transp., Inc., t/a Savon Gas Stations (Savon), a body corporate, appeals, in case of reversal by this Court, the order denying Savon’s motion to intervene as a plaintiff below. Ordinance 735 was approved by the City on February 14, 1966, and on April 12, 1966, Gordon J. Baker (Baker), plaintiff below, filed a bill of complaint naming the City and the act ⁵²² ing Police Commissioner as defendants, praying a declaration that the ordinance be declared unconstitutional, and praying an injunction against its enforcement pending determination on the merits. After demurrers were overruled and the Association obtained an ex parte order allowing its intervention, Baker testified that he was a lessee operator of a gasoline service station and that on or before February 14, the day the ordinance was enacted, he had large signs advertising the sale of gasoline.

Baker testified that following the passage of the ordinance he removed his signs and as a result immediately lost a great volume of business and was placed in a financially precarious position. He stated that the business is very competitive, that once the customer is in the station buying gasoline he has a chance to service under the hood and thus perhaps sell a fan belt, generator, etc., if it is needed, and that a sign visible from the road stating a price for gasoline that is attractive to the motorists is important in getting his customers into his service station. Ordinance 735, challenged here, is in part as follows: “Section 1. Be It Ordained by the Mayor and City Council of Baltimore, That Section 49 of Article 15 of the Baltimore City Code (1950 Edition), title 'Inspections, Weights, and Measures/ subtitle 'Petroleum Products/ be and it is hereby repealed; and that a new Section 49 be and it is hereby ordained in lieu thereof, to stand in the place of the section so repealed and to read as follows: “49.

(a) The City Council finds that the preservation of the natural beauty of Baltimore City requires the limitation of signs advertising prices of motor vehicle fuels at places dispensing fuels in Baltimore City. Such limitation will equally serve to protect the safety and recreational value of public travel on streets in the City and will better protect the public investment in its streets and highways. In furtherance of these purposes, the following limitations are enacted. “(b) Every retail dealer in motor fuel shall publicly display and maintain on each pump or other dispensing device, from which motor fuel is sold by him, ⁵²³ at least one sign and not more than two signs stating the price per gallon of the motor fuel, the State and Federal taxes, and the total price, sold by him from such pump or device. Said sign or signs shall be of a size not larger than eight inches by ten inches.

The price shown on each of such signs shall include an itemization of the cost per gallon of said motor fuel, the amount of Federal taxes and the amount of state taxes. All figures, including fractions, upon said signs, other than figures and fractions used in any price computing mechanism constituting a part of any such pump or dispensing device, shall be of the same size. “(c) No signs stating or relating to the prices of motor fuel, and no signs designed or calculated to cause the public to believe that they state or relate to the price of motor fuel, other than the signs referred to in subsection (b) of this section and required to be displayed upon pumps and other dispensing devices, shall be posted or displayed on or about the premises where motor fuel is sold at retail, and within the view of any public highway or reservation. “Section 2. And Be It Further Ordained, That this ordinance shall take effect from the date of its passage. THEODORE R. McKELDIN, Mayor of Baltimore City.

Approved Feb. 14, 1966.” In spite of the purposes set out in section (a), supra, most of the defendants’ testimony tends to establish a situation not mentioned in the ordinance which the defendants argue the City meant to deal with by the passage of the ordinance. 2 There was ⁵²⁴ some testimony by defendants’ seven witnesses, who either were or had been gas station operators, that the price signs they had used were eye sores, had often been placed on public property, and had on occasion interfered with the vision of motorists leaving the stations. Most of the testimony, however, tended to show that the signs advertising the price of gasoline were often supplied, at less than cost, by the large refining companies that supplied the gas being sold at a particular station and that the prices reflected on these signs were often determined by the pricing policies of the refining company. The refining companies were able to have their suggested prices in effect, the testimony shows, by pressuring the retailers through their rebate policies on the wholesale price of gasoline and by threatening not to renew lessee retailers’ annual leases for the service stations unless prices were kept in line with the suggested price. The defendants’ witnesses agreed that the refining companies were responsible for “gas wars,” that the gas wars were harmful to the retailers and that they may be forced to sell gas at less than cost, that they were forced to meet a lower price of a competitor either by the refining company’s pressure or the pressure of the public in refusing to buy at a price higher than that of a competitor, and that the gas wars could not be carried on without the use of large gasoline price signs visible from the road.

One of the defendants’ witnesses stated that there had been a twenty-eight percent decrease in gasoline business failures since the ordinance went into effect and that there had been no gas wars. There was further testimony that normal competition between retailers continues to exist, but no specific instances were given. On cross-examination it appeared that there had been no price changes since the ordinance went into effect save for increases to reflect increases in the wholesale price of gasoline. Savon, a well known discount gasoline service station dealer, sought to intervene as a party plaintiff more than a week after all of the above testimony had been taken immediately upon being advised that the State’s Attorney intended to nol pros the criminal case in the Criminal Court of Baltimore against Harry Waller, President of Savon, for violation of the ordinance, and thus deny Waller the opportunity to make a record with respect ⁵²⁵ to the ordinance’s validity. 3 Although Savon is satisfied with the judgment below, it points out that if it had been allowed to intervene it would have introduced as evidence: “(a) numerous photographs of instances in Baltimore City of gasoline station signs and signs of other businesses other than price signs which are at least as ‘offensive’ in size and placement to the gasoline price signs which were the sole target of the Ordinance. “(b) numerous photographs of gasoline station signs and promotional displays other than price signs which are larger and more garish than the gas price signs of the type generally in use before the passage of the Ordinance. “(c) papers from the file of the City Council of Baltimore bearing on the illegality of the Ordinance under the anti-trust laws referred to in the opinion below at E. 140-141, including a letter from The Maryland Association of Petroleum Retailers, Inc. signed by its president, A1 Collins, and addressed to Mayor Mc- ⁵²⁶ Keldin.

This letter points out that the Association’s membership of ‘800 small businessmen’ are ‘the sponsors of this Bill;’ that ‘as dealers * * * in our search for a solution’ to the economic problems of gasoline dealers ‘working with our legal counsel (Paul A. Dorf, Esquire) we drafted this Ordinance.’ In his argument for the Ordinance, Mr. Collins states ‘We frankly admit that with the elimination of price signs it will help to stabilize the economics of the service station retailer. We are not against competition, but we realize we must make a fair profit in order to be sound businessmen.’ (Emphasis in original.) “(d) minutes ,of meetings and correspondence of The Maryland Association of Petroleum Retailers, Inc., which counsel believe will further show the antitrust, anti-competitive, and price-fixing conspiracy tainting the Ordinance. “(e) the text of the opinions of Judges Byrnes and Schnauffer in earlier nisi prius cases invalidating similar legislation. “(f) the written opinion of the City Solicitor of Baltimore questioning the validity of the purported esthetic purposes of the Ordinance and declining to express an opinion as to the validity of the Ordinance based upon the purported legislative findings as to esthetics and to City beautification. “(g) expert testimony as to the statistics and market data before and after the passage of the Ordinance indicating the effect of the Ordinance in stifling price competition and similar testimony as to the role and effect of price signs in gasoline marketing and service station operations. “(h) evidence as to the increase after passage of the Ordinance of non-price signs, promotions, displays, games, special offers, premiums, etc. by Baltimore City gasoline service stations (all but a very small number of whom are claimed by the Association as members) and the consequent increase in the total number of signs and uglification of gasoline stations as deal ⁵²⁷ ers proliferated other signs to distract the attention of customers after the only sign the customer is really interested in was prohibited by the Ordinance. “(i) direct testimonial evidence of one or more dealers who refused to join the association’s program, of the approaches made to them by association officers, which were frankly on the sole basis of promoting horizontal price fixing at a figure determined by the Association.” The Chancellor, in the memorandum opinion filed in the lower court declaring the ordinance invalid, pointed out that, if the grounds for adoption of the ordinance are that the signs are at times placed on public ways, or may block the vision of motorists, or that it is necessary to keep refining company representatives from physically entering the premises of a retailer and changing the figures on the signs, there are existing remedies for these problems. Cases are cited to show that if signs are placed so as to constitute a hazard, that action can be enjoined and that injunctive relief can be sought if trespasses are of a continuing nature. Further, Article 19, section 142 and Article 1, section 39 of the Baltimore City Code (1966 ed), it is noted, provide that every occupant of any premise is required to keep the sidewalk bounding upon his premises open and free from obstruction and that signs that overhang walkways or public property are a violation of the Code.

The Chancellor also was of the opinion that if the justification for the ordinance was esthetic considerations, the singling out of gasoline price signs was an arbitrary classification (it also noted concern on these grounds as to some other purposes for the ordinance), since other gasoline station signs are permitted as are “myriads of larger signs, billboards and other displays of other businesses than gasoline stations which mar the beauty of the city more than gasoline price signs.” As to the alleged unfair trade practices by the refining companies the Chancellor noted that: “The evidence to support the contentions is unsatisfactory. The witnesses were highly partisan, and presented a few isolated instances of alleged pressure by ⁵²⁸ major oil dealers. There were no competent economic studies, and no valid general market data but only-vague, conclusory, unsubstantiated statements that major dealers use price signs to stimulate price wars, or to