{ "id": 1621140, "name": "Ferd HAND v. H & R BLOCK, INC.", "name_abbreviation": "Hand v. H & R Block, Inc.", "decision_date": "1975-11-03", "docket_number": "75-89", "first_page": "774", "last_page": "787", "citations": [ { "type": "official", "cite": "258 Ark. 774" }, { "type": "parallel", "cite": "528 S.W.2d 916" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "224 Ark. 558", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1646571 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/224/0558-01" ] }, { "cite": "204 Ark. 156", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1444188 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/204/0156-01" ] }, { "cite": "217 Ark. 560", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8722336 ], "weight": 2, "year": 1950, "opinion_index": 0, "case_paths": [ "/ark/217/0560-01" ] }, { "cite": "100 P. 2d 830", "category": "reporters:state_regional", "reporter": "P.2d", "opinion_index": 0 }, { "cite": "38 Cal. App. 2d 118", "category": "reporters:state", "reporter": "Cal. App. 2d", "case_ids": [ 6040865 ], "opinion_index": 0, "case_paths": [ "/cal-app-2d/38/0118-01" ] }, { "cite": "230 Ark. 315", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1700091 ], "weight": 3, "year": 1959, "opinion_index": 0, "case_paths": [ "/ark/230/0315-01" ] }, { "cite": "115 S.W. 2d 559", "category": "reporters:state_regional", "reporter": "S.W.2d", "opinion_index": 0 }, { "cite": "195 Ark. 1008", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8725899 ], "opinion_index": 0, "case_paths": [ "/ark/195/1008-01" ] }, { "cite": "231 Ark. 307", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1697126 ], "weight": 2, "year": 1959, "opinion_index": 0, "case_paths": [ "/ark/231/0307-01" ] }, { "cite": "49 S.W. 2d 611", "category": "reporters:state_regional", "reporter": "S.W.2d", "year": 1932, "opinion_index": 0 }, { "cite": "185 Ark. 807", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1435127 ], "year": 1932, "opinion_index": 0, "case_paths": [ "/ark/185/0807-01" ] }, { "cite": "297 U.S. 189", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 3929530 ], "weight": 3, "opinion_index": 0, "case_paths": [ "/us/297/0189-01" ] }, { "cite": "65 N.W. 2d 255", "category": "reporters:state_regional", "reporter": "N.W.2d", "opinion_index": 0 }, { "cite": "242 Minn. 302", "category": "reporters:state", "reporter": "Minn.", "case_ids": [ 1768562 ], "opinion_index": 0, "case_paths": [ "/minn/242/0302-01" ] }, { "cite": "295 U.S. 56", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 333728 ], "weight": 3, "pin_cites": [ { "page": "60" } ], "opinion_index": 0, "case_paths": [ "/us/295/0056-01" ] }, { "cite": "292 U.S. 426", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 430059 ], "weight": 3, "pin_cites": [ { "page": "431, 432" } ], "opinion_index": 0, "case_paths": [ "/us/292/0426-01" ] }, { "cite": "438 S. Ct. 231", "category": "reporters:federal", "reporter": "S. Ct.", "opinion_index": 0 }, { "cite": "290 U.S. 398", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 3923972 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/us/290/0398-01" ] }, { "cite": "69 S. Ct. 251", "category": "reporters:federal", "reporter": "S. Ct.", "case_ids": [ 6160224 ], "opinion_index": 0, "case_paths": [ "/us/335/0525-01" ] }, { "cite": "142 F. Supp. 469", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 4271896 ], "year": 1956, "opinion_index": 0, "case_paths": [ "/f-supp/142/0469-01" ] }, { "cite": "152 U.S. 133", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 3574181 ], "year": 1894, "pin_cites": [ { "page": "137" } ], "opinion_index": 0, "case_paths": [ "/us/152/0133-01" ] }, { "cite": "369 U.S. 590", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6169920 ], "year": 1962, "opinion_index": 0, "case_paths": [ "/us/369/0590-01" ] }, { "cite": "291 U.S. 502", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1497894 ], "weight": 3, "year": 1934, "opinion_index": 0, "case_paths": [ "/us/291/0502-01" ] }, { "cite": "380 U.S. 520", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1525350, 1524766 ], "year": 1965, "opinion_index": 0, "case_paths": [ "/us/380/0520-01", "/us/380/0520-02" ] }, { "cite": "235 F. Supp. 817", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 1475484 ], "year": 1964, "opinion_index": 0, "case_paths": [ "/f-supp/235/0817-01" ] }, { "cite": "273 U.S. 418", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6142623 ], "year": 1927, "opinion_index": 0, "case_paths": [ "/us/273/0418-01" ] }, { "cite": "205 Ark. 225", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1488229 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/205/0225-01" ] }, { "cite": "252 Ark. 1201", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1630050 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/252/1201-01" ] }, { "cite": "295 S.W. 9", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "174 Ark. 214", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8719649 ], "opinion_index": 0, "case_paths": [ "/ark/174/0214-01" ] }, { "cite": "254 Ark. 317", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1624063 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/254/0317-01" ] }, { "cite": "215 Ark. 812", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1464574 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/215/0812-01" ] }, { "cite": "225 Ark. 328", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1642573 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/225/0328-01" ] }, { "cite": "237 Ark. 547", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1737879 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/237/0547-01" ] }, { "cite": "244 Ark. 1029", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 8725229 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/244/1029-01" ] }, { "cite": "254 Ark. 1011", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1624099 ], "weight": 2, "year": 1973, "opinion_index": 0, "case_paths": [ "/ark/254/1011-01" ] } ], "analysis": { "cardinality": 1177, "char_count": 26597, "ocr_confidence": 0.898, "pagerank": { "raw": 8.505515331085448e-08, "percentile": 0.4866542412318247 }, "sha256": "a9192dd7a432271b94bb04c29dd97a4ad66df1386966026278fc26c049ffa835", "simhash": "1:112dc63734bdbf86", "word_count": 4481 }, "last_updated": "2023-07-14T18:03:57.275817+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Fogleman, J., concurs." ], "parties": [ "Ferd HAND v. H & R BLOCK, INC." ], "opinions": [ { "text": "J. Fred Jones, Justice.\nThis is an appeal by Ferd Hand from a declaratory judgment holding that Ark. Stat. Ann. \u00a7 70-802 (Supp. 1973) did not apply to a franchise existing between Hand and the appellee H & R Block, Inc. and, consequently, it was not necessary to pass on the constitutionality of \u00a7 70-802. The appellant urges three points on which he relies for reversal designated as follows:\n\u201cThe lower court erred in holding section 70-802 inapplicable to the subject franchise agreement because the plain meaning of the language of the statute requires it to apply to the subject franchise agreement.\nThe lower court erred in holding section 70-802 inapplicable to the subject franchise agreement because a construction of the statute in light of the legislative intent requires it to apply to the subject franchise agreement.\nThe lower court erred in holding section 70-802 inapplicable to the subject franchise agreement because such construction circumvents the social benefit sought to be achieved by the statute.\u201d\nThe facts in this case appear as follows: On August 13, 1969, H & R Block, Inc. entered into a franchise agreement with a Mr. Whitaker of Fort Smith, Arkansas, whereby H & R Block granted to Whitaker a franchise to use the service mark and trade name \u201cH & R Block\u201d in Paris, Arkansas, for a period of five years in connection with Whitaker\u2019s business of preparing income tax returns for the general public. This franchise agreement was for a period of five years with option to renew. On August 13, 1970, with the consent of H & R Block, Whitaker assigned his rights under the franchise agreement to the appellant Ferd Hand and one Jim Randall. In 1971 the Arkansas General Assembly enacted Act 252 which made it unlawful for a franchisor to charge an Arkansas franchisee a royalty fee greater than the lowest royalty fee charged franchisees in other states. In 1973 the General Assembly amended \u00a7 2 of the 1971 Act with the pertinent provision of the Act, as amended, (Ark. Stat. Ann. \u00a7 70-802 [Supp. 1973]) reading as follows:\n\u201cAfter the effective date [January 30, 1973] of this Act, in granting a new franchise for use of a service mark, trade mark or trade name in Arkansas, it shall be unlawful for a franchisor to charge a franchisee a royalty fee which is greater than that which the franchisor customarily charges other franchisees in the United States for similar new franchises granted contemporaneously. \u201d\nOn September 21, 1973, H & R Block entered into a separate agreement designated \u201cMajor Franchise Agreement\u201d with James W. Randall and the appellant Ferd Hand, whereby Hand and Randall were given the exclusive right in the same Paris, Arkansas, area formerly awarded to Whitaker, to use the name \u201cH & R Block\u201d and the service marks \u201cThe Income Tax People,\u201d \u201cAmerica\u2019s Largest Tax Service,\u201d \u201cExecutive Tax Service,\u201d \u201cNation\u2019s Largest Tax Service\u201d and any other name or service marks that may be adopted by Block or registered by Block.\nOn September 31, 1974, H & R Block filed its complaint praying a declaratory judgment under Ark. Stat. Ann. \u00a7\u00a7 34-2501 \u2014 34-2512 (Repl. 1962) to obtain a declaration of the rights and \u201cother legal relations\u201d including a declaratory judgment as to the constitutionality of \u00a7 2 of Act 252 of the 1971 General Assembly as amended by Act 21 of 1973, \u00a7 70-802, supra. The prayer of the complaint was as follows:\n\u201c[PJlaintiff respectfully prays for a judgment declaring that Section 2 of Act 252 of the 1971 Arkansas General Assembly, as amended, does not apply to the agreement dated September 21, 1973 (Exhibit 3), or in the alternative declaring Section 2 of Act 252 of the 1971 Arkansas General Assembly, as amended, to be unconstitutional. ...\u201d\nThe judgment of the trial court recites in part as follows:\n\u201c6. the relationship existing between the plaintiff, as franchisor, and the defendant and James W. Randall, as franchisees, under the agreement dated August 13, 1969, and the assignment dated August 13, 1970, did not become a \u2018new franchise\u2019 by virtue of the agreement dated September 21, 1973 (Exhibit 3 to the Complaint), within the meaning of the term \u2018new franchise\u2019 in \u00a7 70-802;\n7. the acts of the plaintiff in executing and entering into the agreement dated September 21, 1973 (Exhibit 3 to the Complaint), did not constitute \u2018granting a new franchise\u2019 within the meaning of the terms \u2018granting a new franchise\u2019 in \u00a7 70-802 of 1973;\n9. this Court does not imply the assignments will always be treated as this assignment has been treated, however, restricted to the facts of this case, Section 70-802 does not apply to the franchise set forth and described in the agreement dated September 21, 1973 (Exhibit 3 to the Complaint), as the Court construes it as being an amendment or modification of an existing franchise involving substantially the same parties and the same territory, with no additional fee being charged.\n10. Inasmuch as the Court has found and concluded that \u00a7 70-802 does not apply to the franchise existing between the parties, it is not necessary to determine the constitutionality of \u00a7 70-802.\nIn accordance with the foregoing findings of fact and conclusions of law IT IS THEREFORE ORDERED, ADJUDGED AND DECLARED that Act 21 of 1973 (Ark. Stats. Ann. \u00a7 70-802 [Supp. 1973]) does not apply to the franchise between the parties which is set forth and described in the agreement dated September 21, 1973, (Exhibit 3 to the Complaint).\u201d\nBlock successfully argued before the trial court, and unsuccessfully argues here, that the so-called \u201cMajor Franchise Agreement\u201d between Block and the appellant dated September 21, 1973, was only an extension of the franchise to Whitaker dated August 13, 1969, and subsequently transferred to the appellant Hand. It is agreed that the agreement entered into on September 21, 1973, was in violation of \u00a7 2 of Act 252 in that the franchise royalty fee charged was greater than the lowest royalty fee charged in other states; but, Block argues that since the \u201cMajor Franchise Agreement\u201d of September 21, 1973, was only an extension of the August 13, 1969, franchise agreement, neither agreement was affected by the subsequent amendment to the Act which became effective January 30, 1973. The trial court agreed with the appellee Block on this point but we do not.\nArk. Stat. Ann. \u00a7 70-801 (a) (Supp. 1973) provides as follows:\n\u201c \u2018Franchise\u2019 shall mean every aspect of the relationship created between a franchisor and franchisee by an ora! or written agreement or understanding or series of agreements, understandings, or transactions which involve or result in a continuing commercial relationship by which a franchisee is granted or permitted to offer, sell or distribute the goods or commodities manufactured, processed or distributed by the franchisor or to use a service mark, trade mark or trade name owned by the franchisor.\u201d\nIn reaching its decision that the \u201cMajor Franchise Agreement\u201d of September 21, 1973, did not constitute the \u201cgranting a new franchise\u201d within the meaning of the term \u201cgranting a new franchise\u201d in \u00a7 70-802, supra, the trial court pointed out that the \u201cMajor Franchise Agreement\u201d of 1973 involved substantially the same parties and the same territory and that no additional fee was charged. We do not so construe the September, 1973, agreement. The August, 1969, franchise agreement was between Block as franchisor and J. O. Whitaker of Fort Smith, Arkansas, as franchisee. The September 21, 1973, agreement was between Block as franchisor and Ferd Hand and James Randall of 4310 Central Avenue, Hot Springs, Arkansas, as franchisees. The \u201cMajor Franchise Agreement\u201d contains other pertinent differences including a \u201cCancellation of Prior Understandings\u201d provision as follows:\n\u201cThis Agreement expresses fully the understanding by and between the parties hereto and all prior understandings, or commitments of any kind, oral or written, as to this franchise and any matter covered by this Agreement are hereby superseded and cancelled, with no further liabilities or obligations of the parties with respect thereto except as to any monies due and unpaid between the parties to this Agreement at the time of the execution of this Agreement.\u201d\nThe agreement also contains a \u201cRelease of Prior Claims\u201d provision as follows:\n\u201cBy executing this Agreement, Franchisee, individually and on behalf of Franchisee\u2019s heirs, legal representatives, successors and assigns, and each assignee of this Agreement by accepting assignment of the same, hereby forever releases and discharges Block, its officers, directors, employees, agents and servants, including Block\u2019s subsidiary and affiliated corporations, their respective officers, directors, employees, agents and servants, from any and all claims relating to or arising under any franchise agreement or agreements between the parties and executed prior to August 31, 1973, including but not limited to any and all claims, whether presently known or unknown, suspected or unsuspected, arising under the antitrust laws of the United States or of any State.\u201d\nThe appellee attempts to classify a \u201cfranchise\u201d as defined in \u00a7 70-802 as something more than a contract or agreement and argues in effect that a franchise which once comes into being remains the same franchise regardless of subsequent agreements. We are of the opinion and so hold that the \u201cMajor Franchise Agreement\u201d entered into on September 21, 1973, constituted a \u201cnew franchise\u201d within the meaning of the statute. This conclusion brings us to the alternative question presented on this appeal of whether \u00a7 2 of Act 252 is unconstitutional and we are of the opinion that it is.\nIn Stone v. State, 254 Ark. 1011, 498 S.W. 2d 634 (1973), we announced certain basic principles which must be kept in mind when determining the constitutionality of an Act of the Legislature and we set out those principles as follows:\n\u201cThe first of these is that the legislature\u2019s power is limited only by the state and federal constitutions. Rockefeller v. Hogue, 244 Ark. 1029, 429 S.W. 2d 85; Berry v. Gordon, 237 Ark. 547, 376 S.W. 2d 279; McArthur v. Smallwood, 225 Ark. 328, 281 S.W. 2d 428; Gipson v. Ingram, 215 Ark. 812, 223 S.W. 2d 595. The next is that a presumption of constitutionality attends every such act. Redding v. State, 254 Ark. 317, 493 S.W. 2d 116; Bush v. Martineau, 174 Ark. 214, 295 S.W. 9. All doubt must be resolved in favor of constitutionality. Redding v. State, supra; Busk v. Martineau, supra. Another principle is that if it is possible for the courts to so construe an act that it will meet the test of constitutionality, they not only may, but should and will, do so. Davis v. Schimmel, 252 Ark. 1201, 482 S.W. 2d 785; McLeod v. Santa Fe Transportation Co., 205 Ark. 225, 168 S.W. 2d 413. Another way of stating this elementary rule is that every reasonable construction must be resorted to in order to save the statute from unconstitutionality. Bush v. Martineau, supra. See also Redding v. State, supra.\u201d\nThe basis for the challenge to the statute, \u00a7 70-802, supra, is that it effects a deprivation of property rights without due process of law, contrary to the Fourteenth Amendment of the Constitution of the United States. Block argues that the right of the owner to fix a price at which his property shall be sold or used is an inherent attribute of the property itself, and, as such, within the protection of the due process of law clauses of the Fifth and Fourteenth Amendments, and cites Tyson & Brother v. Banton, 273 U.S. 418 (1927), in support of this contention. The Tyson case involved a New York statute which attempted to limit the price ticket brokers could charge over and above the price printed on amusement tickets and the Supreme Court did hold in Tyson as Block now argues. Apparently, however, the public interest became more pronounced in the sale and distribution of amusement tickets in New York during the intervening years between the Tyson decision in 1927 and 1964, because in the 1964 case of Gold v. Dicarlo, 235 F. Supp. 817 (S.D.N.Y. 1964), Tyson was overruled and the court held that a New York statute which set the maximum price for which brokers could sell tickets to amusements was not a denial of property rights without due process, and that decision was affirmed by the United States Supreme Court, 380 U.S. 520 (1965). It was noted in Gold v. Dicarlo that abuse existed in the resale of tickets and that the public interest required state control.\nAs a general rule, it is well settled that the state may regulate private property rights or contract rights through a valid exercise of its police power, including the regulation of prices. Nebbia v. New York, 291 U.S. 502 (1934). In Goldblatt v. Hempstead, 369 U.S. 590 (1962), the United States Supreme Court upheld the validity of an ordinance which regulated a sand and gravel business. In that case, in connection with the police power, the court said:\n\u201cThe term \u2018police power\u2019 connotes the time-tested conceptional limit of public encroachment upon private interests. Except for the substitution of the familiar standard \u2018reasonableness,\u2019 this Court has generally refrained from announcing any specific criteria. The classic statement of the rule in Lawton v. Steele, 152 U.S. 133, 137 (1894), is still valid today:\n\u2018To justify the State in . . . interposing its authority in behalf of the public, it must appear, first, that the interests of the public . . . require such interference; and, second, that the means are reasonably necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals.\u2019 \u201d\nThe validity of Block\u2019s property rights in its name here involved is not questioned. So the issue, as we see it in the case at bar, is whether \u00a7 70-802 is within the valid exercise of police power. Specifically, does the interest of the public require the interference with the franchisor\u2019s and the franchisee\u2019s right to contractually set their own price? In Willys Motors v. Northwest Kaiser-Willys, 142 F. Supp. 469 (D. Minn. 1956), in upholding a state law which prohibited the cancellation of a franchise agreement without just cause, the court said:\n\u201cThat the economic interests of a state may justify the exercise of its protective power notwithstanding interference with contracts is a proposition now well established. See Lincoln Federal Labor Union v. Northwestern Iron & Metal Co., 335 U.S. at page 531, 69 S. Ct. 251.\nThere is one important proviso which must be met before legislation which impairs contractual obligations can be upheld; that is, the legislation in question must be enacted for a public, as contrasted with a private, purpose. See Home Building & Loan Ass\u2019n v. Blaisdell, 290 U.S. 398, 438 S. Ct. 231, 78 L. Ed. 413; Worthen Co. v. Thomas, 292 U.S. 426, 431, 432, 54 S. Ct. 816, 78 L. Ed. 1344; Worthen Co. ex rel. Board of Com\u2019rs, etc. v. Kavanaugh, 295 U.S. 56, 60, 55 S. Ct. 555, 79 L. Ed. 1298; Western States Utilities Co. v. City of Waseca, 242 Minn. 302, 65 N.W. 2d 255; compare Veix v. Sixth Ward Building & Loan Ass\u2019n, supra, with Treigle v. Acme Homestead Ass\u2019n, 297 U.S. 189, 56 S. Ct. 408, 80 L. Ed. 575.\u201d\nIn State v. Hurlock, 185 Ark. 807, 49 S.W. 2d 611 (1932), in upholding the constitutionality of an act requiring the licensing of real estate brokers, this court said:\n\u201cIt is true that the police power can only be exercised to suppress, restrain, or regulate the liberty of individual action, when such action is injurious to the public welfare.\u201d\nIn Ark. State Hwy. Comm\u2019n v. Ark. Power & Light Co., 231 Ark. 307, 330 S.W. 2d 77 (1959), in forbidding the Highway Commission from requiring the power company to move some of its poles for public use without just compensation, we said:\n\u201cThe police power should not be indiscriminately or un* necessarily used. In Beaty v. Humphrey, 195 Ark. 1008, 115 S.W. 2d 559, this court said: \u2018The police power of the State is one founded in public necessity, and this necessity must exist in order to justify its exercise.\u2019\nNo case has been cited to us, and our own research has revealed none, wherein the police power of a state has been used to regulate the price to be agreed upon by contracting parties solely for the benefit of one of the parties. In every instance of such regulation under the police powers, it appears justified only because some broad public interest required it. In the landmark case of Nebbia v. New York, supra, the Supreme Court of the United States for the first time held a state price \u201cfixing\u201d law not in violation of due process. The statute involved in that case established a maximum and minimum price for the retail sale of milk in New York. The court sustained the invocation of the police power because of the significance of the industry to the public health, welfare and interest involved, saying:\n\u201cThe production and distribution of milk is a paramount industry of the state, and largely affects the health and prosperity of its people. Dairying yields fully one-half of the total income from all farm products. Dairy farm investment amounts to approximately $1,-000,000,000. Curtailment or destruction of the dairy industry would cause a serious economic loss to the people of the state.\u201d\nThere are many other federal court decisions and decisions from other states, both pro and con, as to the validity of statutes enacted under the police power but they all turn on the particular statute as related to the facts of the particular case, and the extent to which the public interest, peace, health or welfare were involved, was the final deciding factor in all of them.\nThe valid exercise of police power in price regulation and control has been upheld and approved by this court when a broad public interest is protected. In Concrete, Inc. v. Arkhola Sand & Gravel Co., 230 Ark. 315, 322 S.W. 2d 452 (1959), the Arkansas Unfair Practices Act, which made it unlawful for one engaged in the distribution of a commodity of general use or consumption to discriminate between different sections, communities or cities or portions thereof, with intent to destroy competition, by selling at a lower rate in one such section than in another, was upheld, and in that case we said:\n\u201cThe appellee\u2019s assumption that this is a price fixing statute is erroneous. Dunnell v. Shelley, 38 Cal. App. 2d 118, 100 P. 2d 830. The purpose of the Act, as stated in Ark. Stat. \u00a7 70-313, is to safeguard against the creation or perpetuation of monopolies and to foster and encourage competition by prohibiting unfair and discriminatory practices by which fair and honest competition is destroyed or prevented. We think the means adopted are reasonable and appropriate to promote the purposes mentioned.\u201d\nAlthough in Concrete, Inc, supra, we cited the purpose of the Act as stated therein, scienter was mentioned in the Act, and the public interest was to prevent monopolies by stifling and eradicating competition by prolonged and ruinous price wars. In the case of Gipson v. Morley, Comm\u2019r of Revenues, 217 Ark. 560, 233 S.W. 2d 79 (1950), a statute controlling the minimum prices of intoxicating liquors was upheld. In that case Justice Lefiar, speaking for the majority, said:\n\u201c[T]he courts of Arkansas, like those of all American states, have sustained these monopolistic grants of special privilege on the ground that it is within the competency of the legislature to determine under the police power what regulatory rules are needful in controlling a type of business fraught with perils to public peace, health and safety as is the liquor business.\u201d\nThe purpose of the statute challenged in the case at bar is set out in the emergency clause, Section 8 of the original Act 252 of 1971 as follows:\n\u201cIt is found by the General Assembly that franchisors as described in the Act for adequate fees, have licensed Arkansas corporations and citizens to use their trade names and formulae; that in some instances the licensing agreements contain provisions requiring such franchisees to pay a greater royalty for the use of a trade name than is charged to franchisees doing business under the same trade name in other states, and that in some instances, franchisors collect advertising fees from franchisees which are not expended for advertising purposes; and that only by the immediate passage of this Act can this situation be remedied. Therefore, an emergency is hereby declared to exist and this Act, being necessary for the preservation of the public peace, health and safety, shall be in full force and effect from and after its passage and approval.\u201d\nWe consider the case at bar more in point with Noble v. Davis, 204 Ark. 156, 161 S.W. 2d 189, and Union Carbide and Carbon Corp. v. White River Distributors, Inc., 224 Ark. 558, 275 S.W. 2d 455. In Union Carbide the manufacturer of Prestone antifreeze attempted to control the price for which it was to be sold in Arkansas under a provision of Act 92 of 1937, the so-called \u201cArkansas Fair Trade Act.\u201d We held the provision unconstitutional as outside the police powers of the state and followed our reasoning in Noble v. Davis, supra. Consequently, we shall not review the Union Carbide decision further since our reasoning in Noble v. Davis so nearly coincides with our reasoning in the case at bar. In Noble the constitutionality of Act 432 of 1941 authorizing the state board of barber examiners to fix a minimum price for barber services was involved. In that case we refused to follow Nebbia v. New York, supra, and its progeny since the price regulation under Act 432 was outside the police power of the state. We quote at length from Noble since it sets out our reasoning in that case and also in the case at bar. In Noble we said:\n\u201cThat portion of \u00a7 1 of said Act 432, above quoted, where the Legislature declared that the purpose of the act is the protection of the public health, safety, etc., is the declaration of a non-existent fact. The fact that the Legislature so declared the purpose of the act does not make it so, if, in fact, the declared purpose has no substantial connection with the real purpose of the act. The real and only purposes of the act were to confer power on appellants to establish (1) minimum price schedules for barbers; (2) minimum commissions to be paid to barbers for their services; and (3) opening and closing hours for barber shops. Now just what connection these three purposes have with the \u2018protection of the public safety, health, welfare and general prosperity,\u2019 or with either of them is difficult to perceive. How can the price a barber charges for a haircut or shave, or the commission the owner pays the barbers, or the hour the shop opens or closes affect the public safety, health, welfare or prosperity? Such connection is visionary and not real. In line with what we have just said, Am. Jur., vol. 11, p. 1077, it is said: \u2018The mere assertion by the Legislature that a statute relates to the public health, safety, or welfare does not in itself bring that statute, within the police power of a state, for there must always be an obvious and real connection between the actual provisions of the police regulations and its avowed purpose and the regulation adopted must be reasonably adapted to accomplish the end sought to be attained. A statute or ordinance which has no real, substantial, or rational relation to the public safety, health, moral or general welfare is a palpable invasion of rights secured by fundamental law and cannot be sustained as a legitimate exercise of the police power. One application of the familiar rule that the validity of an act is to be determined by its practical operation and effect and not by its title or declared purpose, is that a constitutional right cannot be abridged by legislation under the guise of police regulations. The exercise of the power must have a substantial basis and cannot be made a mere pretext for legislation that does not fall within it. The Legislature has no power, under the guise of police regulations, arbitrarily to invade the personal rights and liberty of the individual citizen, to interfere with private business or impose unusual and unnecessary restrictions upon lawful occupations, or to invade property rights.\u2019 \u201d\nThe above language in Noble is applicable to \u00a7 2 of Act 252 of 1971 as amended, Ark. Stat. Ann. \u00a7 70-802, in the case at bar. It must be remembered that \u00a7 70-802 is not confined to the franchises sold by the appellee Block but the statute applies to all new franchises for use of a service mark, trade mark or trade name in Arkansas. The statute applies to motel and quick food business as well as the income tax and other businesses. We can only construe the statute as an attempt to insure to Arkansas franchisees a minimum price for a franchise. As we interpret \u00a7 70-802, it simply attempts to insure to Arkansas businessmen who purchase a franchise for the use of a service mark, trade mark or trade name, that they shall receive such franchise at the lowest price in the nation without relation to the public safety, health, moral or general welfare. Consequently, we hold that Section 2 of Act 252 of 1971 as amended, Ark. Stat. Ann. \u00a7 70-802 (Supp. 1973), is unconstitutional.\nThe judgment of the trial court is, therefore, affirmed.\nFogleman, J., concurs.\nSection 3 of the Act had to do with money collected for advertising and not used for that purpose. The Act contains a severability clause and Section 3 is not challenged or before us on this appeal.. We are only concerned with Section 2 as amended.", "type": "majority", "author": "J. Fred Jones, Justice." }, { "text": "John A. Fogleman, Justice,\nconcurring. I concur because I do not think Ark. Stat. Ann. \u00a7 70-802 (Supp. 1973) applied to this transaction. In this respect I agree with the circuit judge and disagree with the majority. This franchise was not a new one, in my opinion. I do not understand how the majority concluded that it is, except by saying so. At the very most, there was a question of fact, resolved against appellees by the circuit judge \u201csitting as a jury.\u201d The result of the court\u2019s holding is that only a change in terms of an existing franchise made by rewriting the agreement would make it a new one. This intention certainly does not appear from the statute.\nI would not consider the constitutional question, because, in my view, the judgment should be affirmed on the basis of the circuit judge\u2019s holding. This would render consideration of the constitutional question improper.", "type": "concurrence", "author": "John A. Fogleman, Justice," } ], "attorneys": [ "Wootton, Land & Matthews, for appellant.", "Rose, Nash, Williamson, Carroll & Clay, for appellee." ], "corrections": "", "head_matter": "Ferd HAND v. H & R BLOCK, INC.\n75-89\n528 S.W. 2d 916\nOpinion delivered November 3, 1975\nWootton, Land & Matthews, for appellant.\nRose, Nash, Williamson, Carroll & Clay, for appellee." }, "file_name": "0774-01", "first_page_order": 822, "last_page_order": 835 }