Appendix — Masters, Inc. v. General Electric Co.

Aprra, in the first above-entitled action, on constitu-

tional grounds, from a judgment of the Appellate Division

of the Supreme Court in the first judicial department,

entered January 5, 1954, unanimously affirming a judg-

ment of the Supreme Court in favor of plaintiff, entered in

New York County upon a decision of the court at Special

Term

15

APPENDIX A

THE OPINIONS BELOW

Opinion by the New York Court of Appeals

Generar. Evectric Company, Respondent,

Vv.

Masters, Inc., Appellant.

Lionen Corporation, Respondent,

Vv.

S. Kiem on tHe Square, Inc., Appellant.

Raxor Corporation et al., Respondents,

v.

Sam Goopy, Appellant,

Argued April 19, 1954; decided June 4, 1954,

. * * * * * *

(O’Brien, J.).

a s

_

Ty

16

Appga, in the second above-entitled action, on consti-

tutional grounds, from a judgment of the Appellate Divi-

sion of the Supreme Court in the first judicial department,

entered October 26, 1953, unanimously affirming a judgment

of the Supreme Court in favor of plaintiff, entered in

New York County upon a decision of the court at Special

Term (Benvenaa, ./.).

Appear, in the third above-entitled action, on constitu-

tional grounds, from a judgment in favor of plaintiff, en-

tered December 31, 1953, upon a resettled order of the

Appellate Division of the Supreme Court in the first

judicial department, which modified, and, as modified,

affirmed a judgment of the Supreme Court in favor of

plaintiffs, entered in New York County upon a decision of

the court on a trial at Special Term (Istoor Wasservocet,

Special Ref.). The modification consisted of deleting

phonograph records hearing the trade-mark “Soria Series”

from the injunctive provisions of the judgment.

Froesser, J. We are again confronted with an attack

upon the so-called Feld-Crawford “Fair Trade Law”

(General Business Law, § 369-a ef seq., L. 1935, ch. 976, re-

enacted L. 1940, ch. 195). This statute first came before

us for review in Doubleday, Doran & Co. v. Macy & Co,

(269 N. Y. 272), decided January 7, 1936, wherein plaintiff

Doubleday sought to enjoin Macy, a nonsigner of its fair

trade agreements, from selling three of plaintiff's books

at less than their stipulated fair trade prices. We held

that the “non-signer” provision was unconstitutional, be-

cause by its means the Legislature was indirectly fixing

prices, a result which it could not, absent special cireum-

stances, accomplish directly.

Exactly eleven months later, the Supreme Court of

the United States reviewed a similar statute enacted in

Illinois, the validity of which was attacked “upon the

grounds that it denies due process of law and the equal

protection of the laws in violation of the Fourteenth

Amendment.” Rejecting these contentions, the Supreme

Court held that the statute was not “so arbitrary, unfair

or wanting in reason as to result in a denial of due proc-

AER IAA LP GALE ID ss EARL BAO AAO Ae VLRO

17

ess”, that it did not constitute an unlawful delegation

of legislative power, and that it satisfied the test of equal

protection of the laws guaranteed by the Fourteenth

Amendment (Old Dearborn Co. v. Seagram Corp., 299 U.S.

183).

Almost immediately thereafter, the New York statute

was again before us in Bourjois Sales Corp. v. Dorfman

(273 N. Y. 167). This time, relying on the Old Dearborn

decision, we upheld the statute against claims that it vio-

lated the New York State Constitution. Indeed, Chief

Judge Crane, who wrote for the court in Doubleday as well

as the Bourjois ease, said in the latter (p. 172): “Had

the Seagram [Old Dearborn| case been decided before

argument in the Doubleday case we certainly would have

followed the Supreme Court’s ruling on the Federal Con-

stitution. We do so now”. The statute has since been

considered and applied by us in at least four cases (Port

Chester Wine & Liquor Shop v. Miller Bros, Fruiterers,

981 N. Y. 101 [retailer's right of action]; Guerlain, Ine, v.

Woolworth Co., 297 N. Y. 11, certiorari denied 332 U. 8.

837 [rebottling of perfumes]; Calamia v. Goldsmith Bros.,

299 N. Y. 636, remittitur amended 299 N, Y. 795 [eigars in

interstate commerce]; and Bristol-Myers Co. v. Picker, 302

N. Y. 61 [trading stamps as price cutting]), in all of which

validity of the law under the New York State Constitution

was urged upon us by the parties, but rejected.

In each of the three cases now before us, the defendant,

a nonsigner of the plaintiff's fair trade agreements, has

heen enjoined from selling plaintiff's fair traded products

at less than their stipulated minimum prices, All of the

transactions in issue involve interstate commerce either

directly or indireetly, and, since in large measure the issues

presented by the three eases are identical, they shall be

discussed together, insofar as possible.

Defendants’ principal attack is directed toward the con-

stitutionality of the Feld-Crawford Act. They argue that

the statute constitutes an unlawful delegation of legislative

powers to private persons in violation of section 1 of

article II] of the New York State Constitution, a depriva-

tion of property without due process of law and a denial

de Ett wewrn

18

of equal protection of the laws in violation of both the

New York State and Federal Constitutions, particularly

the former.

Seventeen years ago we disposed of the delegation of

power and due process arguments in the Bourjois case

(supra). Even though our opinion did not separately and

specifically discuss those issues as arising under the State

Constitution, they were actually presented and argued to

our court, were necessarily disposed of by our decision

there, and are therefore no longer open to question.

Defendants’ economic and policy arguments concerning

the doubtful wisdom of fair trade laws have been urged

before the courts over and over again. They were reviewed

in the Old Dearborn case (supra, pp. 195-196), and, as was

there said, “Where the question of what the facts estab-

lish is a fairly debatable one, we accept and carry into

effect the opinion of the legislature’’; its determination ‘‘is

conclusive so far as this court is concerned” (p. 196).

Such contentions are properly addressed to the Legisla-

ture; they do not alone provide sufficient reason for us to

reopen settled constitutional issues.

Nor is there merit to defendants’ contention that the

statute denies equal protection of the laws. In the Old

Dearborn case (supra) the equal protection argument

which was there raised against the Illinois fair trade stat-

ute was summarily rejected by the Supreme Court in its

holding (p. 197): ‘‘Clearly, the challenged section of the

Illinois act satisfies this test’’ (emphasis supplied). In the

present case, moreover, the statute creates no unreasonable

or arbitrary discrimination against low cost, minimum

service retailers, as defendants contend. The statute itself

does not purport to create any such distinction or classi-

fication. Its provisions are wholly inapplicable to un-

marked goods. As to marked goods, it merely permits a

manufacturer, whose trade-mark or brand name may

represent a large advertising investment and a carefully

nurtured good will, to prevent retailers, over whom he

would otherwise have little control, from seriously impair-

ing the value of that trade-mark and good will by reselling

his identified products at unreasonably low prices. Finally,

Ri ANALY OTP LD LT YTS LAN TU 2 PETES OO SAP

19

we have already held that this statute constitutes a reason-

able regulation under the police power (Bourjois case,

supra).

ote now present a new constitutional a

by attacking the Maguire Act (66 U. S. Stat. 632, U.

Code, tit. 15, § 45), which was enacted following the td

decision in Schwegmann Bros. v. Calvert Corp. (341 U.S.

284). That act exempts from the Federal antitrust laws

fair trade agreements made pursuant to existing or future

State laws, and permits their enforcement against non-

signers as well as signers who are engaged in interstate

commerce. Defendants argue that this enactment gives

to the States power over interstate commerce which is

denied them under the Federal Constitution.

Beginning with the familiar distinction between com-

merece which, while primarily local, indirectly affects inter-

state commerce, and that which is directly of national

-oneern, defendants claim that the latter type of commerce

is, by virtue of the Constitution, exclusively within the

power of Congress, and cannot under any circumstances

be regulated by the States. However, this basic distinction

is drawn merely to determine the extent of State power

in those areas where Congress by its silence has permitted

its own power to remain dormant. The distinction does

not, as defendants contend, restrict the power of a State

acting, as here, under an express grant by Congress

(Prudential Ins. Co. v. Benjamin 328 U. S. 408, 421-423).

As the Supreme Court said in Southern Pacific Ry. Co. v.

Arizona (325 U. S. 761, 769): ‘‘Congress has undoubted

power to redefine the distribution of power over interstate

commerce. It may * * * permit the states to regulate the

commerce in a manner which would otherwise not be per-

missible [citations]’’.

It is true that in Schwegmann Bros. v. Calvert Corp.

(supra) the Supreme Court held that by the Miller-Tydings

amendment (50 U. S. Stat. 693, U. S. Code, tit. 15, §4 1),

which exempted from the Sherman Antitrust Act only

‘contracts or agreements’’. Congress did not demonstrate

an intent to permit fair trade ‘‘compulsion”’ against non-

signers of those agreements. However, the court did not

Serre NS «

Spa Sn

20

in its opinion indicate that such ‘‘compulsion’’, if expressly

authorized by Congress, would transgress any constitu-

tional prohibition; indeed, the decision contains clear im-

plications to the contrary. The Maguire Act now author-

izes such ‘‘compulsion’’, and its constitutionality has been

upheld by the United States Court of Appeals for the Fifth

Cirenit in Schwegmann Bros. Giant Super Markets vy. Eli

Lilly & Co. (205 F. 2d 788) a decision which the Supreme

Court twice refused to review (certiorari denied 346 U. §,

856, rehearing denied 346 U. S. 905).

Nor should we for this purpose distinguish between

transactions affecting interstate commerce, as in the Gen-

eral Electric and Lionel cases herein, and those directly

in interstate commerce, such as the mail-order sales of the

Raror ease. Just as in the Feld-Crawford Act, where no

distinetion is drawn between interstate and local commerce, }

so the language of the Maguire Act makes no discrimina-

tion between sales of goods affecting, and sales directly in,

interstate commerce. On the contrary, the purpose of that

Federal statute, as expressed by Congress in its preamble

thereto, was to permit State fair trade laws to apply to

commodities, contracts and activities “in or affecting”

interstate commerce. Furthermore, the case of Sunbeam

Corp. v. Wentling (185 F. 2d 903, revd. 341 U.S. 944, mod.

192 F. 2d 7), on which defendants rely so heavily in this

connection, was decided prior to the Maguire Act’s enact-

ment. That the statute was designed to alter the Wentling

rule so as to open all interstate commerce to the operation

of State fair trade acts, appears from the statutory lan-

guage as aforesaid, from its legislative history and from

judicial decision (Sunbeam Corp. v. MacMillan, 110 F.

Supp. 836).

Defendants further contend that the Feld-Crawford Act

was never originally intended by our Legislature to apply

to resale price maintenance as against nonsignatories en-

caged in interstate commerce, and that without re-enact-

ment after passage of the Maguire Act it cannot be so

applied. But the case of People v. Bootman (180 N. Y. 1),

on which defendants rest this argument, is inapplicable

here. True, we there held that without re-enactment after

Warr

wee

CSN. ERASE TERE ESS SU SCILSN OLE DUET SLO LIS GOERS LR BE LENE be

21

passage of the Congressional enabling statute, our State

Fish and Game Law was not applicable to interstate game.

But there, we had previously held that the statute in ques-

tion was intended to apply only to local game (People vy.

Buffalo Fish Co., 164 N. Y. 93).

In the instant cases, however, instead of having, by prior

decision, limited the Feld-Crawford Act to local commerce,

we have squarely held that the statute applies to non-

signatories in interstate commerce (Calamia v. Goldsmith

Bros., supra). Although such application was later de-

clared unconstitutional in Schweqmann Bros. vy. Calvert

Corp. (supra), passage of the Maguire Act in 1952 removed

the final barrier to complete interstate application of the

New York statute. Under such cireumstances it has long

heen well established that the Constitution does not require

a State statute to be re-enacted in order to be effective

(Matter of Rahrer, 140 U.S. 545; Central Pacific R. R.

(Co. v. Nevada, 162 U. 8S. 512; Tua vy. Carriere, 117 U.S.

%1; 1 Southerland on Statutory Construction [3d ed.],

¢ 2027).

Each of the defendants contends that its plaintiff's fair

trade contracts do not comply with the provisions of see-

tion 369-a of the General Business Law. We have examined

these contracts separately, and find on the records before

ns that in each ease there were in existence fair trade con-

tracts which did comply with that part of the statute which

sanctions such contracts between “vendor” and “buyer”.

Numerous other contentions have been raised by one or

more of the defendants. We have carefully considered each

of them and find them to be without merit.

The judgment in each case should be affirmed, with costs.

Lewis, Ch. J., Conway, Desmonp, Dye and Futp, J/.,

coneur; Vax Vooruts, J., taking no part.

In each action: Judgment affirmed.

Decision of Supreme Court of the State of New York, County of

New York.

This action having been instituted by plaintiff against

defendant for an injunction and for damages, and the cause

having duly come on before me for trial at Special Term,

CAR?

ees tet

Part III of this Court, at the New York County Court

House, Borough of Manhattan, City, County and State of

New York, on May 7, 1953; and the parties having appeared

by their respective counsel and having entered into a writ-

ten Stipulation of F acts, and due deliberation having been

had thereon;

Now, I do hereby make the following findings of essen-

tial facts which have been stipulated to by the parties:

FINDINGS OF FACT

1. Both plaintiff and defendant are domestic corpore-

tions duly organized and existing under the laws of the

State of New York.

2. Plaintiff produces, among other things, electrical

housewares, clocks, automatic blankets, fans, heating pads,

heaters and heat lamps (hereinafter sometimes referred to

as “GE Small Appliances”). GE Small Appliances are

manufactured by the Small Appliance Division of plaintiff

in factories located in the States of Connecticut, California,

Massachusetts, Pennsylvania, New York and North Caro-

lina, and sold and shipped by said Division to wholesale

distributors located in the State of New York and all other

states throughout the United States. Sales by plaintiff of

GE Small Appliances during the year 1952 amounted to

substantially in excess of $1,000,000.

3. GE Small Appliances are sold by the plaintiff through

wholesale distributors located throughout the country who

are franchised by the plaintiff. The franchise agreements

entered into by the plaintiff with said wholesale distribu-

tors and jobbers are in the form annexed hereto as Exhibit

A. The franchised wholesale distributors purchase GE

appliances from the plaintiff, acquiring absolute title

thereto. They are under no agreement to sell to retailers

at minimum or other resale prices established by the plain-

tiff.

4. GE Small Appliances are in turn sold by said whole-

sale distributors, to, among others, retail dealers located

in the State of New York and elsewhere throughout the

af REL SE GE BI POSES Pa Ne LAS WP STE SE » LE Ptah BREF

23

United States, and said appliances are ultimately resold by

such retail dealers to the general public.

5. GE Small Appliances bear the plaintiff's trade-mark

“General (GE) Electric” and are in free and open compe-

tition in the State of New York with appliances of the

same general class produced by others.

6. Plaintiff has expended large sums of money in pro-

moting and advertising GE Small Appliances and in such

advertising, utilizes, among other media, nationwide peri-

odieals, magazines, publications and national radio and

television broadcasts. Plaintiff has established a reputa-

tion and goodwill for said appliances and for the trade-

mark under which they are produced and sold.

7. Since in or about 1937, defendant has owned, man-

aged, and operated a single retail store now located at 66

West 48th Street, New York City, wherein it has sold at

retail a great diversity of merchandise, including GE

Small Appliances. Defendant actively competes for public

patronage with numerous other retail stores, including

large department stores, small retail stores, general stores,

electrical appliances stores, hardware stores and other

retail establishments.

8. The overhead and cost of doing business varies among

different retail stores and different types of retail stores,

depending upon such factors as cash or credit policies, na-

ture or extent of services rendered, the volume of pur-

chases, the extent of advertising and promotional activities,

and others. Since its inception defendant has adopted and

followed as its principal business policy the minimization

of cost of doing business and overhead, by selling only for

cash, curtailment of various customer services, reduction of

advertising and promotional activities, volume purchases

and through other means, with a view toward being able

to profitably sell its goods to the consuming public at prices

less than stores rendering credit and other services and

which otherwise do not or cannot follow the policies of

the defendant.

9, Defendant makes sales at retail in New York to

customers residing in the State of New York and other

states, including the States of Connecticut and New Jersey,

and approximately $200,000 of its annual sales are made

in New York to customers residing in states other than

New York. In addition, advertisements, bulletins and eir-

culars are distributed to customers outside the State of

New York.

10. During the course of the operations of defendant, as

aforesaid, defendant has from time to time purchased for

resale to the general publie GE Small Appliances from

various wholesale dealers, distributors and others located

within and outside the State of New York. Defendant has

acquired title to the appliances so purchased. At no time

has defendant purchased GE Small Appliances directly

from the plaintiff. Defendant has resold such GE Small

Appliances at prices below those charged by other com-

peting retail establishments who do not follow the business

policies and practices of defendant.

11. Defendant has built up a reputation in the minds of

the purchasing publie as a retail establishment wherein a

consumer, by foregoing certain services and conveniences

afforded by other competing retail stores, ean obtain mer-

chandise at prices less than those charged by other stores

and defendant's goodwill and business is in large measure

dependent on such reputation. From a very small begin-

ning defendant's sales volume has grown to in excess of

eight million dollars a year.

12. Since July 14, 1952, and from time to time thereafter,

the plaintiff has entered into agreements with retail dealers

in the State of New York under which plaintiff established

minimum retail resale prices for GE Small Appliances

(hereinafter sometimes referred to as “GE Fair Trade

Contracts”). A copy of the standard form of such agree-

ment is annexed hereto as Exhibit B. Plaintiff is now party

to approximately 1,000 agreements in the form of Exhibit

B with retailers in the State of New York. There are in

excess of 3,500 retail dealers handling GE Small Appli-

ances within the State of New York. In addition, plaintiff

1, he ag

— oe EI Y ARES SROPPSEAS ABE SOLEIL

—— —_— << fe Pa FO

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49

25

has agreements with one wholesale distributor, General

Electric Supply Company, and several retail dealers in the

State of New York, in the form annexed hereto as

Exhibit C.

13. Plaintiff presently has agreements in the form of

Exhibit B hereto with retail dealers in all states of the

United States in addition to New York, except the States

of Missouri, Florida, Texas, Michigan, Vermont, Georgia

and the District of Columbia.

14. Defendant has never entered into any GE “Fair

Trade Contract” with plaintiff nor has it entered into any

other resale price maintenance agreement relating to GE

Small Appliances with any other person, firm or corpora-

tion. However, on or about September 9, 1952, and at vari-

ous other times before and after that date, plaintiff duly

notified the defendant of the existence of its said “Fair

Trade Contracts” (both in the form of Exhibits B and C

annexed hereto) with other retail dealers in the State of

New York and of the minimum retail resale prices estab-

lished by plaintiff for GE Small Appliances under said

agreements. Copies of the schedules of minimum retail

resale prices established by plaintiff pursuant to said Fair

Trade agreements in effect on October 1, 1952, and there-

after, of which defendant was given notice on or about the

effective dates appearing on said schedules are attached

hereto as Exhibit D.

15. By notation contained on the schedules of minimum

retail resale prices, Exhibit D hereto, there are exempted

from the operation of the GE Fair Trade Contracts sales

made to employees of the plaintiff, sales made by whole-

sale distributors and retail dealers to their own employees,

and sales to governmental agencies, commercial and insti-

tional establishments buying for their own use and not for

resale,

16. Since October 1, 1952 defendant has wilfully and

knowingly advertised, offered for sale and sold at retail

one or more of GE Small Appliances at prices lower than

those established by plaintiff, as shown on the schedules

of minimum retail resale prices annexed as Exhibit D.

26

17. Said sales by defendant were not for the purpose

of closing out defendant’s stock of GE Small Appliances, or

because said GE Smal!l Appliances were damaged or de-

teriorated in quality, and such sales were not made by an

officer acting under the orders of any court.

18. Retailers competing with defendant have threatened

to discontinue handling GE Small Appliances and other

retailers have refused to feature and advertise GE Small

Appliances because of violations of plaintiff’s fair trade

contracts by defendant and others.

19. Plaintiff has no adequate remedy at law.

20. General Electric Supply Company (hereinafter

sometimes referred to as “GESCO”) is a division of Gen-

eral Electrie Distributing Corporation, a wholly owned sub-

sidiary of plaintiff, and is engaged, inter alia, in the dis-

tributing and sale of GE Small Appliances and of similar

appliances manufactured by other manufacturers in inter-

state commerce through operating branches located

throughout the United States, including one which is lo-

eated at 585 Hudson Street in the City of New York. An

internal audit which does not disclose the names of pur-

chasers from GESCO or prices paid for merchandise is

made of the General Electric Distributing Corporation by

the plaintiff's headquarters office once each year and is paid

for by GESCO. The results of said audits are not made

available to the personnel of the Small Appliance Division

of plaintiff. Annexed as Exhibits E and F is a tabulation

of officers and directors of plaintiff and the officers and

directors of General Electric Distributing Corporation.

Said Exhibits E and F set forth respectively the officers

and directors of plaintiff and the officers and directors of

General Electric Distributing Corporation. The physical

location of the headquarters of GESCO is in a building

owned by the plaintiff; the space occupied by the head-

quarters of GESCO is leased by it from the plaintiff and

GESCO pays rent for the space. Ralph J. Cordiner, the

President of the plaintiff, selects the directors of General

Electric Distributing Corporation and causes the stock of

General Electric Distributing Corporation owned by the

EPG PELE TELEMEDICINE 5! SELES AOD AIL CIO ELE IE

DnDmmpD rmnpowy

27

plaintiff to he voted in accordance with his directions and

has done so since 1950 when he became President of plain-

tiff. Such percentage of the earnings of General Electric

Distributing Corporation, after taxes, as is distributed, is

distributed in the form of @évidends on General Electrie

Distributing Corporation’s stock held by plaintiff. The

employees of both plaintiff and General Electrie Distribut-

ing Corporation participate in the same retirement benefit

trust which covers the employees of plaintiff and its sub-

sidiaries. Charles R. Pritchard is Vice President of Gen-

eral Electrie Distributing Corporation and the operating

head of the GESCO division of said corporation and he

reports to Ralph J. Cordiner in his capacity as President

of General Electric Distributing Corporation. The hooks,

records and accounts of plaintiff and General Electrie Dis-

tributing Corporation are kept entirely separate and apart

hy their respective employees. Each operating branch of

GESCO is franchised by a separate agreement with plain-

tiffs Small Applianee Division in the same form as Ex-

hibit A hereto which is the same form under which all dis-

tributors are franchised by plaintiff's Small Appliance Di-

vision, and said franchise agreements are the only contrae-

tual relations between GESCO and plaintiff's Small Appli-

anee Division.

21. Plaintiff does not have outstanding resale price main-

tenance agreements with respect to its major appliances,

television and radio, which are manufactured and sold by

separate and distinct operating divisions of plaintiff other

than the Small Appliance Division. Said appliances bear

plaintiff's trade-mark (General (GE) Electric). The an-

nual dollar volume of sales of said major appliances, tele-

vision and radio, exceeds the annual dollar volume of sales

of GE Small Appliances.

22. During the period from September 1, 1952 to Decem-

her 31, 1952, inclusive, the prices paid by plaintiff's whole-

sale distributers in New York, ineluding GESCO, to the

plaintiff for GE Small Appliances were less than the prices

charged by plaintiff's wholesale distributors in New York,

including, GESCO, for GE Small Appliances on their sales

to retail dealers, including the defendant.

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28

23. During the period from September 1, 1952 to De-

cember 31, 1952, inclusive, plaintiff's wholesale distributors

in New York, including GESCO, sold GE Small Appliances

to employees of plaintiff and to their own employees, and

to governmental agencies and commercial or institutional

establishments buying for their own use and not for resale

at prices below the minimum retail prices set forth on

Exhibit D hereto in accordance with the exemptions con-

tained thereon.

CONCLUSIONS OF LAW

1. Plaintiff is engaged in the production and distribu-

tion in interstate commerce of various electrical appliances,

including electrical housewares, clocks, automatic blankets,

fans, heating pads, heaters, and heat lamps (hereinafter

sometimes referred to as “GE small appliances”),

2. Pursuant to the terms of the Feld-Crawford Act of

New York (Laws af 1935, ch. 976; See. 376-a et seq. of

the General Business Law of the State of New York) plain-

tiff, commencing on OF about July 14, 1952, has duly entered

into contracts (hereinafter referred to as ‘GE Fair Trade

Contracts’’), now in full force and effect, with retail deal-

ers in the State of NeW York, under which agreements there

was and is vested in the plaintiff the right to establish,

from time to time, the minimum retail resale prices of

GE small appliance*:

83. The aforesaid GE Fair Trade Contracts comply in

all respects with the requirements of the Feld-Crawford

Act.

4. Although the defendant is not a party to any GE

Pair Trade Contract the defendant, since on or about

September 9, 1952, tas been and is bound by the terms of

the aforesaid Feld-Crawford Act and by the GE Fair

Trade Contracts entered into by the plaintiff with various

retailers in the State of New York pursuant thereto, not

to sell at retail GK small appliances at prices lower than

those heretofore and hereafter preseribed by plaintiff pur-

snant to said contracts.

eh a tt aaa —

POOR COPY

29

5. That since October 1, 1952, defendant has wilfully

and knowingly advertised, offered for sale and sold various

quantities of GE small appliances at prices lower than

those established by plaintiff pursuant to the aforesaid

contracts.

6. That by so doing defendant has engaged in unfair

competition as defined by Seetion 369-b of the Feld-

Crawford Act, and the plaintiff is a person ‘‘damaged”’

by such acts within the meaning of said section.

7. That plaintiff has established all the faets required

to be shown in order to entitle plaintiff to the benefits of

the Feld-Crawford Act.

8. That plaintiff has no adequate remedy at law.

9, That the Feld-Crawford Act does not constitute an

unconstitutional delegation of legislative power to private

persons in violation of Section I of Article III of the

Constitution of the State of New York.

10. That the Feld-Crawford Act does not deprive the

defendant of liberty and property without due process of

law, in violation of Section 6 of the Constitution of the

State of New York and of the Fourteenth Amendment of

the Constitution of the United States.

ll. That the Feld-Crawford Act does not deprive de-

fendant of the equal protection of the laws in violation of

the Fourteenth Amendment of the Constitution of the

United States.

12. That the Feld-Crawford Act does not constitute an

unconstitutional burden upon interstate commerce, in viola-

tion of Section 8 of Article I of the Constitution of the

United States or of Article VI of the Constitution of the

United States.

18. That although plaintiff is engaged in interstate eom-

meree, and plaintiff has entered into ‘Fair Trade Con-

tracts’? not only in the State of New York but in other

states of the United States, such contracts are immunized

from the prohibitions of the Sherman Anti-Trust Act (15

; on

, 5 os

eae? —

be ho" an

30

U. S.C. A. 1) by the provisions of the Miller-Tydings

Amendment and of the MeGuire Act.

14. That the Miller-Tydings Amendment and the Me-

Guire Act do not constitute unconstitutional delegations

of legislative power to private persons, in violation of

Section 8 of Article I of the Constitution of the United

States.

15. That the Miller-Tydings Amendment and the Me-

Guire Act do not deprive the defendant of liberty and

property without due process of law in violation of the

Fifth Amendment to the Constitution of the United States,

16. That the Miller-Tydings Amendment and the Me-

Guire Act do not deprive the defendant of the equal pro-

tection of the laws in violation of the Fourteenth Amend-

ment of the Constitution of the United States.

17. That the Miller-Tydings Amendment and the Me-

Guire Act do not constitute unconstitutional delegations of

Congressional power over interstate commerce to the State

of New York and other states of the United States in viola-

tion of Sections 1 and 8 of Artiele I of the Constitution of

the United States or of Article VI of the Constitution of

the United States.

18. Plaintiff is entitled to judgment permanently en-

joining defendant, its officers, agents and employees, from

advertising, offering for sale or selling any GE small

appliances manufactured and distributed by plaintiff pur-

suant to the aforesaid GE Fair Trade Contraets in foree

in this State at prices lower than those heretofore or

hereafter preseribed by plaintiff from time to time pur-

suant to said contracts.

19. Let judgment be entered herein accordingly.

Dated: May 7, 1953.

Kenvetu O’Brien,

Justice of the Supreme Court of the

State of New York.

Piteliae

31

Judgment

At a Special Term, Part IIL of the Supreme Court of the

State of New York, held in and for the County of New

York at the Court House thereof, Foley Square, in the

Borough of Manhattan, City and State of New

York, on the 8 day of May, 1953,

resent: How. Kexxern O'’Bries, Justice.

[Same Tirie.]

This action having been instituted by the plaintiff against

the defendant for an injunction and for damages and the

cause having duly come on before me for trial at Special

Term Part III of this Court at the New York County Court

House, Borough of Manhattan, City, County and State of

New York on May 7, 1953, and the parties having appeared

by their respective counsel and having entered into a writ-

fen stipulation of facts and due deliberation having been

had thereon, and the Court having made and filed its deei-

sion dated May 7, 1953, separately stating its findings of

fact and its conclusions of law, wherein the Court directed

judgment as hereinafter provided

Now, on motion of White & Case, attorneys for plaintiff,

if is

(hohe, ADJUDGED AND DECREED:

1. That the defendant, Masters, Inc., its officers, agents,

~rvants and employees and all other persons acting under

its authority or contrel be and they hereby are perma-

wently enjoined and restrained from advertising, offering

for sale or selling at retail in the State of New York, elec-

tric housewares, clocks, automatic blankets, fans, heating

pds, heaters and heat lamps, all as more particularly de-

scribed in price sheets annexed to the complaint and sub-

sequent revisions thereof and substitutions therefor, manu-

factured and sold by plaintiff and bearing plaintiff's trade-

mark ‘General (GE) Eleetrie’’ at prices lower than the

nininwn retail resale prices now established therefor by

the plaintiff pursuant to agreements entered into between

the plaintiff and various retail dealers in such commodities

throughout the State of New York, or such minimum retail

resale prices as may hereafter be established for such com-

modities by the plaintiff.

Enter,

/s/ K. O'B.,

Justice of the Supreme Court of

the State of New York.

/s/ Arcutpatp R. Watson,

Clerk. ;

Plaintiff's Address:

570 Lexington Avenue,

New York, N. Y.

Defendant’s Address:

66 W. 48th Street,

New York, N. Y. '

Filed: May 8, 1953.

lattice ie ial IOs BP DEPTS OLE ee LO SPP SN Ge il OIE AF OS +

ww.»

32a-A

Judgment of Court of Appeals

COURT OF APPEALS

State or New York, ss:

Pleas in the Court of Appeals held at Court of A ypeals Hall

in the City of Albany on the 4th day of 5 2a in the

Year of Our Lord One Thousand Nine Hundred and

Fifty-Four, before Judges of said Court.

Remittitur ......., June 4, 1954

Witness,

Tue Hox. Epmunp H. Lewis,

Chief Judge, Presiding.

Raymonp J. Cannon,

Clerk.

No. 76.

GexeraL Evectric Company,

Respondent,

vs. >

Master, Ixc.,

Appellant.

Be Ir Rememperen, That on the 11th day of March in the

year of our Lord one thousand nine hundred and fifty-four,

Master, Ine., the appellant—in this cause, came here unto

the Court of Appeals, by Joseph F. Ruggieri, its attor-

ney—, and filed in the said Court a Notice of Appeal and

return thereto from the judgment of the Appellate Division

of the Supreme Court in and for the First Judicial Depart-

ment. And General Electrie Company, the respondent—

in said cause, afterwards appeared in said Court of Ap-

peals by White & Case, its attorneys.

Which said Notice of Appeal and the return thereto, filed

as aforesaid, are hereunto annexed.

Wrerevpox, The said Court of Appeals having heard

this cause argued by Mr. Leon Lauterstein, of counsel for

the appellant—, and by Mr. Thomas Kiernan, of counsel

POO A MATE LE POE AL MRD! EAE A IO BI NOB Oe TO Be i PE Pp TN oe

32-8

for the respondent, brief filed by amicus curiae, and after

due deliberation had thereon, did order and adjudge that

the judgment of the Appellate Division of the Supreme

Court appealed from herein be and the same hereby is af-

firmed, with costs.

And it was also further ordered, that the records afore.

said, and the proceedings in this Court, be remitted to the

said Supreme Court, there to be proceeded upon according

to law.

Tuererore, it is considered that the said judgment be

affirmed, with costs, as aforesaid.

And hereupon, as well the Notice of Appeal and return

thereto aforesaid as the judgment of the Court of Appeals

aforesaid, by it given in the premises, are by the said Court

of Appeals remitted into the Supreme Court of the State

of New York before the Justices thereof, according to the

form of the statute in such case made and provided, to be

enforced according to law, and which record now remains

in the said Supreme Court, before the Justices thereof, &e.

/s/ Raymonp J, Cannon

Clerk of the Court of Appeals

of the State of New York.

Covrr or Appeats, CLerk’s Orrice, |

Albany, June 4, 1954

| Heresy Cerrivy, that the preced-

ing record contains a correct

transcript of the proceedings in

said cause in the Court of Ap-

peals, with the papers originally

filed therein, attached thereto.

/s/ Raymonp J. Cannon

Clerk.

LOPE ELI! LEE LIL NO PEED LENORE OS ET Hm Mh BT. oe SYS OS a ae

33

APPENDIX B

GENERAL BUSINESS LAW OF THE STATE OF NEW YORK

(McKinney's Consolidated Laws of New York)

ArticLe XXIV-A—Farr Trane Law

“S 60a. Price fixing of certain commodities permitted,

1. No contract relating to the sale or resale of a com-

modity which hears, or the label or content of which bears,

the trade mark, brand, or name of the producer or owner

of such commodity and which is in fair and open competi-

tion with commodities of the same general class produced

by others shall be deemed in violation of any law of the

state of New York by reason of any of the following provi-

sions Which may be contained in such contracts :

(a) That the buyer will not resell such commodity

except at the price stipulated by the vendor;

(bh) That the vendee or producer require any dealer

to whom he may resell such commodity to agree that

he will not, in turn, resell except at the price stipulated

by such vendor or by such vendee.

2. Such provisions in any contract shall he deemed to con-

tain or imply conditions that such commodity may be resold

without reference to such agreement in the following cases;

(a) In closing out the owner’s stock for the purpose

of discontinuing delivering any such commodity.

(hb) When the goods are damaged or deteriorated in

quality, and notice is given to the publie thereof.

(¢) By any officer acting under the orders of any

court.”

“ue

£369-b. Unfair competition defined and made actionable.

Wilfully and knowingly advertising, offering for sale

or selling any commodity at less than the price stipulated

in any contraet entered into pursuant to the provision of

34

section three hundred sixty-nine-a, whether the person so

adv-stising, offering for sale or selling is or is not a party

to sa. contract, is unfair competition and is actionable at

the suit of any person damaged thereby.”

“$ 369-¢. Exceptions.

This article shall not apply to any contract or agree-

ment between producers or between wholesalers or between

retailers as to sale or resale prices.”

“$ 369-d. Definitions.

The following terms, as used in this article, are hereby

defined as follows: ‘producer’ means grower, baker, maker,

manufacturer or publisher. ‘Commodity’ means any sub-

ject of commerce.”

“$ 369-e. Effect of partial invalidity.

If any provision of this article is declared unconstitu-

tional it is the intent of the legislature that the remaining

portions thereof shall not be affected but that such remain-

ing portions remain in full force and effect. Added L. 1940,

¢. 195, $3, eff. March 19, 1940.”

Section 5 of Federal Trade Commission Act, as amended, Act of

~g rt 1952, Chapter 745, 66 Stat. 632 (McGuire Act), 15

U. § 45:

(a) (1) Unfair methods of competition in ecommerce

ond unfair or deceptive acts or practices in commerce, are

declared unlawful.

(2) Nothing contained in this section or in any of the

Antitrust Aets shall render unlawful any contracts or

agreements prescribing minimum or stipulated prices, or

requiring a vendee to enter into contracts or agreements

preseribing minimum or stipulated prices, for the resale

of a commodity which bears, or the label or container of

which bears, the trademark, brand, or name of the pro-

dueer or distributor of such commodity and which is in free

and open competition with commodities of the same general

TF eee ea a a a ek

ee =

35

class produced or distributed by others, when contracts or

agreements of that description are lawful as applied to

intrastate transactions under any statute, law, or public

policy now or hereafter in effect in any State, Territory,

or the District of Columbia in which such resale is to be

made, or to which the commodity is to be transported for

such resale.

(3) Nothing contained in this section or in anv of the

Antitrust Acts shall render unlawful the exercise or the

enforcement of any right or right of action created by any

statute, law, or publie poliey now or hereafter in effect in

any State, Territory, or the District of Columbia, which in

substance provides that wilfully and knowingly advertis-

ing, offering for sale, or selling any commodity at less than

the priee or prices prescribed in such contracts or agree-

ments whether the person so advertising, offering for sale,

or selling is or is not a party to sweh a contract or agree-

ment, is unfair competition and is actionable at the suit

of any person damaged thereby.

(4) Neither the making of contracts or agreements as

described in paragraph (2) of this subsection, nor the

exercise or enforcement of any right or right of action as

deseribed in paragraph (3) of this subsection shall consti-

tute an unlawful burden or restraint upon, or interference

with, commerce.

(5) Nothing contained in paragraph (2) of this sub-

section shall make lawful contracts or agreements provid-

ing for the establishment or maintenance of minimum or

stipulated resale prices on any commodity referred to in

paragraph (2) of this subsection, between manufacturers,

or between producers, or between wholesalers, or between

brokers, or between factors, or between retailers, or be-

tween persons, firms, or corporations in competition with

each other.

(6) The Commission is empowered and directed to pre-

vent persons, partnerships, or corporations, except banks,

common carriers subject to the Acts to regulate commeree,

air carriers and foreign air carriers subject to the Civil

ETRE MET

(ince SOE Ri

36

Acronauties Act of 1938, and persons, partnerships, or

corporations subject to the Packers and Stockyards Act,

1921, except as provided in section 227(b) of Title 7, from

using unfair methods of competition in commerce and un-

fair or deceptive acts or practices in commerce.

BLEED THROUGH on eee

“COPY "FILED.

OCT 22 194

HAROLD B. WILLEY, Clerk

IN THE

Supreme Court of the United States

October Term, 1954

No. 381

MASTERS, INC.,

Appellant,

against

GENERAL ELECTRIC COMPANY,

Appellee.

On Appeal From the Court of Appeals in New York

MOTION TO DISMISS

4

Tuomas Kiernan

+ Epear Barton

Attorneys for Appellee

14 Wall Street

New York 5, N. Y.

Of Counsel

Howarr Arse.

Wuire & Case

14 Wall Street

New York 5, N. Y.

i 307 = BAR PRESS INC., 54 LAFAYETTE sT., NEW YORK 13— wa. 5 - 8432-38.

IN THE

Supreme Court of the United States

October Term, 1954

No. 381

EE

MASTERS, INC.,

Appellant,

against

GENERAL ELECTRIC COMPANY,

Appellee.

On Appeal From the Court of Appeals in New York

—— ee

MOTION TO DISMISS

Appellee, pursuant to Rule 16 of the Revised Rules of

the Supreme Court of the United States, moves to dismiss

on the ground that the appeal does not present a substan-

tial federal question.

Statement

This is an appeal from the final judgment of the New

York Court of Appeals entered on June 4, 1954 enjoining

appellant from selling at retail, certain electrical appli-

ances manufactured and sold by appellee and bearing its

trademark, at less than the minimum retail resale prices

stipulated pursuant to fair trade contracts enforced in New

York State.