Union Underwear Co. v. Aide
Union Underwear Co. v. Aide
Opinion of the Court
Appellee, Union Underwear Company, Inc., hereinafter referred to as plaintiff, instituted this action in the Circuit Court of Fayette County praying that the appellant, Ferris Aide, d/b/a Aide’s Discount Store, hereinafter referred to as defendant, be permanently enjoined from advertising, offering for sale or selling at retail any products manufactured and sold by plaintiff under its Fruit of the Loom trademark at prices less than the fair trade prices stipulated by plaintiff. The complaint alleges that defendant entered into a
“. . . we hereby agree that we shall sell your Fruit of the Loom products only at retail in accordance with the provisions of this agreement.
“We hereby agree not to advertise, sell, or offer for sale, your Fruit of the Loom products, directly or indirectly, in any State where agreements of this character are lawful:
“1. At less than the minimum retail prices listed on Schedule A attached hereto, . . .
“2. At less than the minimum retail prices fixed from time to time by notice mailed by you, . . .
“If we at any time decide to discontinue the sale at retail of your Fruit of the Loom pro- ' ducts, or decide to sell your said products at other than retail, or at other than the minimum retail prices established by you, we will notify you in writing immediately of such fact and offer in such writing to sell and deliver to your mill at your invoice prices all your Fruit of the Loom products which we then have on hand. You agree upon receipt of such notice that you will re-purchase the same and promptly furnish us with shipping instructions.”
Defendant answered admitting the sales as alleged but contended that such contract was void because: the so-called fair trade act of West Virginia had been declared unconstitutional; such contract was in effect price fixing and contrary to public policy; the contract purports to be an agreement in perpetuity and against
“Please be advised that the ‘Fair Trade Agreement’ executed by the undersigned under date of July 11, 1963, is hereby terminated.
“Please be further advised that I presently have on hand no FRUIT OF THE LOOM products for return.”
Plaintiff objected to the filing of the amended answer and moved to strike the same as failing to allege any sufficient defense which motion the court sustained and entered its order to the following effect:
“That the Defendant, Ferris A. Aide, his agents and employees, be and they hereby are until further order of this court, jointly and severally, ENJOINED, RESTRAINED, and INHIBITED from advertising for sale, offering for sale, or selling, directly or indirectly, any product or products manufactured or distributed by the Plaintiff, Union Underwear Co., Inc., bearing the trade-mark, brand or name ‘Fruit of the Loom’, at less than the minimum retail prices specified by the Plaintiff, Union Underwear Co., Inc., from time to time, as provided by said contract of July 11, 1963, plus the amount of all sales and excise taxes, except as provided in said contract and the Fair Trade Act of the State of West Virginia;”
The threshold question to be determined is whether, as contended by defendant, this Court has heretofore passed upon and held unconstitutional Chapter 123, Acts of the Legislature, 1937, Regular Session, the “Fair Trade Act”, now contained in Code, 47-11, as amended, and hereinafter referred to as the “Act”. Contrary to defendant’s contention, plaintiff argues that this Court has passed upon and held invalid only Section 6 of the Act. Paradoxically, counsel for both the plaintiff and the defendant rely for their respective positions upon the comparatively recent decision of this Court in General Electric Company v. Dandy Appliance Co., 143 W. Va. 491, 103 S. E. 2d 310, hereinafter referred to as the Dandy case or Dandy.
The Dandy case was certified to this Court by the Circuit Court of Kanawha County on its own motion, each of the certified questions being predicated upon the fact that the Act was not applicable to the defendant Dandy inasmuch as he was not a party to any contract fixing minimum resale prices as provided by Section 2 of the Act. Incidentally, it might be observed at this point that there was no reference to Section 2 of the Act from the beginning to the end of the Court’s opinion in the Dandy case or in the syllabus thereof. These are the four questions certified to this Court:
“ (1) Is or is not the provision of the West Virginia ‘Fair Trade Act’ (Acts of the Legislature, 1937, Regular Session, Ch. 123; W. Va. Code, as amended, Ch. 47, Article 11, Sec. 6), which requires the defendant to maintain certain minimum retail resale prices, a proper exercise of the police power of the State of West Virginia ?
*923 “(2) Is or is not the provision of the West Virginia ‘Fair Trade Act’, (Acts of 1937, Ch. 123; W. Va. Code, as amended, Ch. 47, Art. 11, Sec. 6), which requires the defendant to maintain certain minimum retail resale prices for appliances, even though the defendant did not enter into any contract with the plaintiff providing for snch minimum retail resale prices, an invasion of the property rights of this defendant without due process of law?
“ (3) Is or is not the West Virginia ‘Fair Trade Act’, (Acts of 1937, Ch. 123, Code, as amended, Ch. 47, Art. 11, Sec. 6), void and of no legal effect because enacted in 1937, contrary to a Federal Statute known as the Sherman Anti-Trust Act?
“(4) Does or does not Section 6 of the West Virginia ‘Fair Trade Act’, (Acts of 1937, Ch. 123; W. Va. Code, as amended, Ch. 47, Art. 11, Sec. 6), in so far as it relates to rights against non-signers, embrace an object not expressed in the title of said Act so as to be rendered void as violative of Section 30, Article VI of the Constitution of the State of West Virginia?” (Italics supplied.)
In the paragraph preceding the stating of the four questions the court said:
“The Circuit Court overruled the defendant’s demurrer as to its first three grounds and sustained it on the fourth ground, holding that the Fair Trade Act is void because it violates Section 30, Article VI of the Constitution of West Virginia, in that the title to the act is not sufficient to express its purpose of bringing within its scope a non-signer of Fair Trade agreements; and the Court certified to this Court the following questions, which though substantially are the same as those specified in the demurrer, are exactly and expressly these:” (Italics supplied.)
“Section 6 of Chapter 123, Acts of the Legislature, 1937, Regular Session, reads as follows:
“ ‘Wilfully and knowingly advertising, offering for sale or selling any commodity at less than the price stipulated in any contract entered into pursuant to the provisions of this act, whether the person so advertising, offering for sale or selling is or is not a party to such contract, is unfair competition and is actionable at the suit of any person damaged thereby.’
“We consider it unnecessary, in view of the recital of the issues, to quote the other sections of the statute.” (Italics supplied.)
All of the language of the Court’s opinion in Dandy will not, for obvious reasons, be restated herein to confirm what we believe is apparent, that is, that the Court in Dandy was passing only upon the question of the validity of Section 6, the non-signer provision of the Act. We believe the following statement in the opinion to be conclusive in that regard:
“Though it is of great advantage to the plaintiff to have additional protection in the provision making it unlawful to sell trademark or brand articles below the prices fixed by the manufacturer, nevertheless the manufacturer or distributor is not deprived of his rights to make reasonable contracts with others in regard to the price at which such merchandise shall be sold, and he can protect himself by suits for enforcement or damages. To extend such manufacturer’s or distributor’s rights to the public generally is but another improper exercise of the police power and not in our opinion warranted, and being such*925 is void, as in violation of Section 10 of Article III of the Constitution of West Virginia, which provides that:
“ ‘No person shall he deprived of life, liberty, or property, without due process of law, and the judgment of his peers.’ ” (Italics supplied.)
The language “to the public generally” obviously referred to that portion of the Act, namely, Section 6, which applied to non-signers of such contracts. The Court elearly stated in the above quoted paragraph that a manufacturer or distributor is not to be deprived of his rights to “make reasonable contracts with others in regard to the price at which such merchandise shall be sold, and he can protect himself by suits for enforcement or damages.” This is the next to the last paragraph of the opinion: “The title to the Fair Trade Act so enacted by the Legislature does not sufficiently indicate that non-signers of contracts for the sale of merchandise at prices fixed by the manufacturers or distributors are included within its terms and the words ‘to protect . . . the general public against injurious and uneconomic practices in the distribution of competitive commodities. . .’ do not in our opinion apprise the public that they may become pecuniarily liable for a violation of its provisions as specified in Section 6 of the Act.” (Italics supplied.) It is the view of the Court as presently constituted that the last paragraph of the Dandy opinion stating that “. . . we are of the opinion to, and so hold, that the so-called ‘Fair Trade Act’, Chapter 123, Acts of the Legislature, 1937, Regular Session, is not a proper exercise of the police power and is unconstitutional and void as violating the due process of law provisions, and as not containing a title sufficiently expressing its purpose, as required by the Constitution of West Virginia.” must be read in the light of the next to the last paragraph, above quoted, as well as the other statements contained in the Court’s opinion.
This is the first syllabns point of the Dandy case: “The Pair Trade Act, as contained in Chapter 123, Acts of the Legislature, 1937, Regular Session, which provides that the sale of trade-marked items at a price less than that stipulated is a violation of the Act ivhether the seller is a party to the stipulated price contract or not, is unconstitutional and void as an ar
In the very recent case of State v. Wender, 149 W. Va. 413, 141 S. E. 2d 359, a unanimous decision of this Court which was comprised of the same personnel as now, the opinion contained this statement with reference to Dandy: “In General Electric Co. v. A. Dandy Appliance Co., 143 W. Va. 491, 103 S. E. 2d 310, this Court held unconstitutional and void that portion of the so-called ‘Fair Trade Act’ of this state, Code, 47-11-6, as amended, which provided that the seller of trade-marked items at a price less than that stipulated by the manufacturer was a violation of the act whether or not the seller was a party to the stipulated price contract....” (Italics supplied.) It is the opinion of this Court that the validity of Section 2 of the Act which applies to parties who voluntarily enter into contracts with relation to the provisions of the Act has not heretofore been passed upon by this Court and we now proceed to do so. We hold that the provisions of Section 2 are valid, that they embrace no
The Circnit Conrt of Fayette County, therefore, is affirmed in its holding that the plaintiff was entitled to injunctive relief at the time the action was instituted. However, while it is true that this is a suit in which the parties are governed by equitable principles, and even though the record discloses without contra
Affirmed in part; reversed in part; and remanded.
Dissenting Opinion
dissenting:
I emphatically dissent from the judgment of the majority which, contrary to the clearly expressed view of four judges of the Court in its four to one decision, Judge Given dissenting, in General Electric Company v. A. Dandy Appliance Company, Inc., 143 W. Va. 491, 103 S.E. 2d 310, sustains the constitutional validity of the Fair Trade Act, as contained in Chapter 123, Acts of the Legislature, 1937, Regular Session, notwithstanding the manifest intention of the majority in that case to hold and, as I believe, did hold, as stated in Point 1 of the syllabus, that the act was “unconstitutional and void as an arbitrary and unreasonable exercise of the police power because of having no substantial relation to the public health, safety or general welfare.” In my judgment the foregoing quotation from the syllabus point in the Dandy case constitutes the actual holding and decision of this Court on the question of the constitutionality of the entire Fair Trade Act.
Though there may be a difference of opinion among the members of the bench and bar of this State as to whether a point stated in the syllabus prevails over
Regardless of the lengthy discussion and conflicting views of counsel as expressed in their written briefs and oral arguments as to the extent of the holding in the Bandy case, no one can read the opinion of the majority or the dissenting opinion in the Bandy case with care, intelligence and discrimination without being convinced that all the judges who participated in that case then intended and believed that the decision of the majority was that the Fair Trade Act in its entirety, not merely its Section 6, was unconstitutional and void as an arbitrary and unreasonable exercise of the police power of the State.
Though the majority opinion in the instant case contains many quoted statements from the majority opinion in the Bandy case to sustain its erroneous and labored view that the decision in that case was limited to the unconstitutionality of Section 6 of the Fair Trade Act, the majority opinion omits the important and controlling statements in the majority opinion in
The following quotations from the majority opinion in the Dandy case, which are, of course, omitted from the majority opinion in this case, clearly and unequivocally show the scope of the holding and the reasoning of the four to one decision in the Dandy case which in my opinion are controlling and should have been followed and adhered to in the decision in this case. The statement that the majority of this Court in the Dandy case intended to hold and did hold the Fair Trade Act unconstitutional in its entirety is not merely my language; it is the language of the majority opinion in that case as will appear from the italicized portions of the following quotations:
“The first and second questions certified may well be considered together because it must first be determined whether the Fair Trade Act is a proper exercise of the police power of the state, for if it is not, then it necessarily follows that it is not due process as to non-signers, but if the Act is within the police power of the state, the question of whether it violates the due process provision of the West Virginia Constitution may still require consideration and determination.
“Although great reliance is placed by the plaintiff upon the case of Old Dearborn Distributing Co. v. Seagram Distillers Corp., 299 U.S. 183, 57 S. Ct. 139, 81 L. Ed. 109, decided in 1936, and which involved a similar Fair Trade statute enacted in Illinois, and that case remains as authority for the validity of the West*935 Yirginia Act in so far as its validity nnder tlie due process clause of the Federal Constitution is concerned, such authority is not conclusive upon this Court in determining whether such an Act is within the police power of this State or is violative of the due process of law provision of the West Yirginia Constitution, even though the provisions of both Federal and State Constitutions are practically identical in language. However, our conclusion that the Act in question is not a proper exercise of the police power of this state loill eliminate any necessity for holding the Act valid because it may not violate the Federal Constitution. We are of the opinion that the determination of the extent and limitations of the police power of this state remains a prerogative of the sovereignty of this state and any question of constitutionality thereof under the Constitution of West Yirginia is determinable by this Court. The converse proposition which was involved in the Old Dearborn Distributing Company case is not necessarily applicable to the case here before us for decision.
‘ ‘ Since the first enactment of these Fair Trade Laws there have been decisions in many of the states determining their validity or invalidity, and the earlier decisions were mostly favorable to their validity, but as of the present time it appears that the decisions are more or less equally divided. With such respectable authority in favor of the positions of both plaintiff and defendant, it would not be too difficult to substantiate either position, but here it becomes necessary to define the police power of this state so far as the same is or is not applicable here, and decide the issue in this case accordingly.
“Two States, namely, New Mexico and Ohio, have by their very recent decisions declared Fair Trade Acts an improper exercise of the police power of the state, and accordingly, violative of the due process law provisions of their constitutions. Skaggs Drug Center, a Corporation v. General Electric Company, a*936 Corporation, 315 P. 2d 967; Union Carbide & Carbon Corp. v. Bargain Fair, Inc., et al. 167 O.S. 182, 147 N.E. 2d 481.
“The case of Skaggs Drug Center v. General Electric et al., supra, contains a quite complete review of many of the cases on this subject, and in addition thereto, the court has cited the extensive annotations contained in 125 A.L.R. 1335 and 19 A.L.R. 2d 1139, to which cases and annotations we now herein refer, in order to eliminate the necessity of citing and discussing in detail the opinions and decisions on this subject. Such a discussion will only result in a repetition of the authorities without affording additional reason or information. However, because the following pertinent paragraph quoted in the Skaggs case is so expressive of our reasoning, we insert the same with approval here, as follows:
“ ‘The Supreme Court of Georgia in Cox v. General Electric Company, supra, in commenting upon the decisions of other states as to the fair trade acts, made the following very pertinent statement [211 Ga. 286, 85 S.E. 2d 519] :
“ ‘It is earnestly argued that a number of the supreme courts have upheld the validity of their Pair Trade Acts, which were almost, if not entirely, identical with the Georgia statute under consideration, and our attention is called to a number of decisions by the Supreme Court of the United States. We are aware of the fact that a number of the State Supreme Courts have upheld these acts, a number have not passed upon them, and others have held them invalid. We are also familiar with the conflicting decisions on this question by the Supreme Court of the United States, as pointed out in the special concurring opinion of Chief Justice Duckworth in Harris v. Duncan, supra [208 Ga. 561, 67 S.E. 2d 692]. We are here, however, dealing with the statutes of this State and with the question of whether or not they violate the Constitution*937 of the State of Georgia. What the coarts of other States have decided is not controlling, and this is one of the few powers left to States to decide for themselves regardless of what the Supreme Court of the United States may nor may not have decided. We are also familiar with the modern trend to allow the government to encroach more and more upon the individual liberties and freedoms. So far as we are concerned, we will not strike down the Constitution of our State for this purpose; neither will we follow the crowd. The scheme described in the petition now under consideration permits a manufacturer, under the guise of protecting his property rights in a trade name and trademark, to control the price of his product down through the channels of trade into the hands of the ultimate consumer, and into the hands of persons with whom he has no contractual relation whatever. This statute clearly violates the provisions of the due process clause of the Constitution of the State of Georgia. ’
“And further, at page 974, the Court concluded:
“ ‘In view of the above, it will be determined that §2, Chapter 44 of the Laws of 1937 (§49-2-2, N.M.S.A. 1953) is unconstitutional and void as an arbitrary and unreasonable exercise of the police power without any substantial relation to the public health, safety, or general welfare insofar as it concerns persons who are not parties to contracts provided for in §1, Chapter 44, Laws of 1937 (§49-2-1, N.M.S.A. 1953).’
“In Union Carbide & Carbon Corp. v. Bargain Fair, Inc., supra, the Court, in holding that the Fair Trade Act was an unauthorized exercise of the police power and contravened the ‘due process’ provision of the Ohio Bill of Rights, said:
“ ‘In recent years and in the light of present-day conditions, courts have become more critical of the fair trade acts and have invalidated parts of them with increasing frequency.
*938 “ ‘Basically, those cases approving the acts in toto proceeded on the theory that a producer of a trademarked product, who has expended money and effort in establishing it on the market at a specified selling price, ought not to he subjected to the injury which cut-rate sales would entail; that the ownership of a trademark and goodwill is a property right which the law should protect and is assertable against all who sell the producer’s products; and that price cutting is not only damaging to the goodwill and business of the producer but has a deleterious effect on the public as well. Also brought into the equation is the economic philosophy of the fair trade acts, which it is said bear a real and substantial relationship to the public welfare, and the proposition that their enactment is a matter for legislative determination in the exercise of the police power, with which the courts should not interfere.
“ ‘On the other hand, the position taken by other courts is that the real effect of the fair trade acts is anticompetitive price fixing rather than the protection of the goodwill of trademarked products. Goodwill should be measured by the price the goods can command in a competitive market and not by allowing the manufacturer to sell at a pegged retail price which he himself selects. In normal times, the inflexible price arrangements which the acts sanction are opposed to our traditional concepts of free competition for the benefit of the consuming public, and the clause binding those who do not enter into a price-fixing contract with the manufacturer offends such concepts. Hence,- the nonsigner clause interferes with the constitutional right of the owner of property to dispose of it as he pleases and represents the exercise of the police power for a private as opposed to a public purpose.’
“While much is said of the rights of owners of trademarks and brands to have their property rights protected, and certainly such rights should be protect*939 ed to siicli extent as may be compatible with, the constitutional rights of the public, we do not think that the protection which the Act in question purports to give is reasonably related to the public morals, health or welfare, and, as this Conrt has recently in the case of State v. Memorial Gardens Development Corp., 143 W. Va. 182, 101 S.E. 2d 425, said:
“ ‘All legislation under the police power must be within the constitutional inhibitions. Milkint v. McNeeley, 113 W. Va. 804, 169, S.E. 790; Eubank v. City of Richmond, 226 U.S. 137, 33 S. Ct. 76, 57 L. Ed. 156.’
“Though it is of great advantage to the plaintiff to have additional protection in the provision making it unlawful to sell trademark or brand articles below the prices fixed by the manufacturer, nevertheless the manufacturer or distributor is not deprived of his rights to make reasonable contracts with others in regard to the price at which such merchandise shall be sold, and he can protect himself by suits for enforcement or damages. To extend such manufacturer’s or distributor’s rights to the public generally is but another improper exercise of the police power and not in our opinion warranted, and being such is void, as in violation of Section 10 of Article III of the Constitution of West Virginia, which provides that:
“ ‘No person shall be deprived of life, liberty, or property, without due process of law, and the judgment of his peers.’
“So from the foregoing we are of the opinion, and so hold, that the so-called ‘Fair Trade Act’, Chapter 123, Acts of the Legislature, 1937, Regular Session, Chapter 47, Article 11, Section 6 of the Code of West Virginia, as amended, is not a proper exercise of the police power of the state and is unconstitutional, and the answer to the first certified question is in the negative and the answer to the second certified question is in the affirmative.
*940 < < # * *
‘‘For the reasons stated, we are of the opinion to, and so hold, that the so-called ‘Fair Trade Act’, Chapter 123, Acts of the Legislature, 1937, Regular Session, is not a proper exercise of the police power and is unconstitutional and void as violating the due process of law provisions, and as not containing a title sufficiently expressing its purpose, as required by tbe Constitution of West Virginia.”
That Judge Given dissented from what he believed and considered was the erroneous holding of the majority that the Fair Trade Act was unconstitutional and void in its entirety clearly appears from this quotation from his dissenting opinion:
“My understanding of the majority opinion, as it relates to the constitutionality of the Fair Trade Act, is that the power of the Legislature in the passage of the Act in question was so arbitrarily exercised as to render the Act itself unconstitutional and, impliedly, at least, that the passage of a Fair Trade Act is within the legitimate reaches of the legislative branch of the State Government. I agree that such legislation is within the police power of the State, and that such power must not be arbitrarily or capriciously exercised. I can not believe that the power of the Legislature as to the Act here involved was arbitrarily exercised. ’ ’
To recapitulate, I would reverse the decision of the Circuit Court of Fayette County and dismiss the proceeding for the reason that the actual decision in the Dandy case correctly held the Fair Trade Act unconstitutional and void in its entirety and was not limited to the unconstitutionality of Section 6 of the Act as the majority erroneously holds in this case, and for the additional reason that regardless of the scope of the decision in the Dandy case, it can not be successfully contended that it was not the clearly expressed intention and the clearly expressed reasoning of four of the judges of this Court that the Fair Trade Act is
Reference
- Full Case Name
- Union Underwear Co., Inc., a Corp. v. Ferris A. Aide, D/B/A Aide’s Discount Store
- Cited By
- 1 case
- Status
- Published