REGULATION OFTRADING STAMPS BY CITIES ‑- PRE‑EMPTION OF FIELD BY STATE -- RIGHT OF MANUFACTURER TO DESIGNATE AGENT TO REDEEM COUPONS CONTAINED IN ORIGINAL PACKAGE
(1) A city may not adopt and enforce an ordinance regulating and licensing the use, redemption and giving of trading stamps, coupons or other similar devices because the state has preempted this field.
(2) A manufacturer or group of manufacturers may designate an agent to redeem such trading stamps or coupons.
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January 26, 1956
Honorable Marshall A. Neill
State Representative, 9th District
210 First National Bank Building
Pullman, Washington Cite as: AGO 55-57 No. 192
In your letter of December 27, 1955, you requested our opinion on the following questions:
(1) May a city adopt and enforce an ordinance regulating and licensing the use, redemption and giving of trading stamps, coupons or other similar devices in view of the state's entry into this field by chapter 36.91 RCW?
(2) May a group of manufacturers, each of whom issues premium coupons or other similar devices contained in or attached to original packages, designate an agent, personal or corporate, to redeem such coupons or similar devices, on behalf of said manufacturers?
It is our opinion that your first question must be answered in the negative and your second question in the affirmative.
[[Orig. Op. Page 2]]
In 1905 the state legislature first prohibited the use of trading stamps. This act was held unconstitutional. Leonard v. Bassindale, 46 Wash. 301. Chapter 253, Laws of 1907, (RCW chapter 19.84) required such stamps to be redeemable in cash or merchandise at the option of the holder. Chapter 134, Laws of 1913 (RCW chapter 36.91) authorized merchants who desired to employ trading stamps to do so upon payment of a $6,000 license fee for each retail store. In 1916 the United States supreme court upheld the licensing act although the court observed that the license fees "were intended to be prohibitive." Tanner v. Little, 240 U.S. 369, and Pitney v. Washington, 240 U.S. 387.
By way of illustration, we understand that Seattle enacted an ordinance in 1940 licensing trading stamps and similar devices. A comparison of the state act and municipal ordinance reveals that they conflict in the following particulars:
(1) The statute requires a license from the county auditor. RCW 36.91.010. Under the ordinance the license is issued by the city comptroller.
(2) RCW 36.91.020 provides that the $6,000 fee is payable to the county treasurer. The ordinance makes the $6,000 fee payable to the city treasurer.
(3) Under RCW 36.91.050 a violation of the chapter is a gross misdemeanor while under the ordinance a violation is made a misdemeanor.
Article XI, section 11 of the state constitution provides as follows:
"Any county, city, town or township may make and enforce within its limits all such local police, sanitary and other regulations as are not in conflict with general laws."
In 37 Am. Jur. 924, Municipal Corporations, § 287, it is stated:
"* * * The words 'not in conflict with general laws' as there employed do not mean that municipal regulations passed in the absence of general laws foreclose [[Orig. Op. Page 3]] the right of the state to assert its sovereignty, but merely that the police power may be exercised until such time as the state acts. Municipal regulations must then give way to the general law. It is contemplated by a constitutional provision of the type under discussion that the state legislature has the absolute right by general law to enact statutes which will have validity in all parts of the state, including municipalities, and, where the legislature so acts, local laws in conflict therewith ipso facto become void. * * *"
In 62 C.J.S. 292, Municipal Corporations, § 143, the rule is stated:
"* * * Where the legislature has occupied the field, an ordinance may be invalid as in conflict with a statute notwithstanding the absence of any actual grammatical conflict between the two, or, indeed, notwithstanding the ordinance and statute are identical in terms. In such case the invalidity arises, not from a conflict of language, but from the conflict of jurisdiction which would result from dual regulations covering the same ground, * * * "
An examination of RCW chapter 36.91 makes two things clear: (1) That it was intended to apply to every person issuing the regulated devices within the state, and (2) that no provision is made for local regulation. Seattle Electric Co. v. The City of Seattle, 78 Wash. 203, held that where the legislature has preempted to itself an entire subject matter, there is no room for the enactment of local laws affecting that subject matter. See, also,State ex rel. Webster v. Superior Court, 67 Wash. 37. InYakima v. Gorham, 200 Wash. 564, the court held that the police power of a municipality can be exercised only in conformity with the general laws of the state as declared by the legislature. Where the state has asserted its jurisdiction over a given subject matter a conflicting municipal ordinance must give way.
Where the legislature has specifically carved out from the subject matter which a statute regulates a field for local regulation there may be concurrent legislative enactments at state and local levels. SeeKimmel v. The City of Spokane, 7 Wn. (2d) 372, and cases cited therein. The state law regulating trading stamps is so comprehensive that we cannot conceive that this rule is applicable.
[[Orig. Op. Page 4]]
We recognize that inSperry & Hutchinson Company v. Tacoma, 68 Wash. 254, that the supreme court upheld a Tacoma ordinance regulating and licensing the issuance of trading stamps. We note, however, that this case was decided prior to the 1913 enactment in which the state asserted jurisdiction in this field.
We conclude that a municipal ordinance undertaking to regulate and license the use, redemption or issuance of trading stamps, coupons or other similar devices is of no force and effect.
In 1939 the legislature amended the trading stamp statute by providing for an original package exception. RCW 36.91.040 provides as follows:
"Nothing in this chapter, or in any other statute or ordinance of this state, shall apply to the issuance and direct redemption by a manufacturer of a premium coupon, certificate, or similar device; or prevent him from issuing and directly redeeming such premium coupon, certificate, or similar device, which, however, shall not be issued, circulated or distributed by retail vendors except when contained in or attached to an original package. The term 'manufacturer,' as used in this section means any vendor of an article of merchandise which is put up by or for him in an original package and which is sold under his or its trade name, brand or mark: Provided, That no premium coupon, certificate or similar device shall be issued in connection with the sale of eggs and the products thereof, or milk and the products thereof."
Your remaining question requires an analysis of this section. One of the reasons for the original package exception was to protect the local merchant from the penalties of the act in situations in which he sold merchandise containing stamps or coupons placed in the packages by the manufacturer. The legislature evidently deemed it undesirable to require merchants to remove the box tops from cereal boxes. Nor was it considered feasible to establish a criminal intent in handling merchandise containing hidden coupons.
[[Orig. Op. Page 5]]
The problem is to ascertain the intention of the legislature in employing the phrase "direct redemption by a manufacturer." The legislature must have recognized what is almost universally true, that the manufacturers referred to are corporations. It must also have recognized that a corporation only may act through its agents. This basic principle is stated in Fletcher, Cyclopedia of the Law of Private Corporations, Volume 2, page 33, as follows:
"It is well settled that a corporate body can only act by agents. The corporation itself can do no act, * * * In other words, a corporation, being an artificial person, can transact its business only through its officers and agents, duly appointed and authorized, and one dealing with a corporation must deal with its agents, * * *"
We believe the legislature must have intended that the responsibility of redeeming coupons contained in the original package should not be that of the retail merchant. We conclude that the appointment of a resident agent within this state to facilitate the mechanics of redemption of coupons contained in or attached to the original package would be in harmony with the legislative intention.
In our opinion the designation by a manufacturer of an agent, corporate or otherwise, to redeem such coupons would substantially comply with the requirements of the trading stamp licensing act.
We hope the foregoing analysis will prove helpful.
Very truly yours,
ANDY G. ENGEBRETSEN
Assistant Attorney General