102 F.2d 69 (3rd Cir. 1939), 6795, Minter v. Federal Trade Commission

Docket Nº:6795.
Citation:102 F.2d 69
Case Date:February 14, 1939
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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102 F.2d 69 (3rd Cir. 1939)

MINTER et al.



No. 6795.

United States Court of Appeals, Third Circuit.

February 14, 1939

David H. Kinley, of Philadelphia, Pa., for petitioners.

W. T. Kelley, Chief Counsel, Federal Trade Commission, Martin A. Morrison, Ass't. Chief Counsel, and James W. Nichol, Sp. Atty., all of Washington, D.C., for respondent.

Before BIGGS, CLARK, and BUFFINGTON, Circuit Judges.

CLARK, Circuit Judge.

This case seems to us a futile continuation of earlier litigation. The trade practices of these petitioners have already been expressly condemned in a unanimous opinion of the United States Supreme Court, Federal Trade Commission v. Keppel & Brothers, 291 U.S. 304, 54 S.Ct. 423, 78 L.Ed. 814, February 5, 1934. As the high court there adopted, or rather amplified, the view of the then minority of this court, we can be supposed to be thoroughly familiar with the holding.

The particular practice whose ceasing and desisting was there and here ordered is known in the marts of commerce as selling by 'break and take' (pick and take, draw deals, punch cards and punch boards) rather than by 'straight goods' packages. The nomenclature furnishes a clue to the disapproval both of the judicial bodies and encouragingly, of the 'better element' in the trade itself.

The 'break and take' method is the sale of merchandise (or amusement as in the case of motion picture bank nights, 12 Wisconsin Law Review 251, 17 Boston University Law Review 238), by the inducement of a lottery. The customer does not buy only a chance represented by a ticket, he pays for a chattel and a chance for another unpaid chattel, the ticket being the opportunity for fortuitous selection of a differentiated article. It is, so to speak, a lottery with trimmings, and one might observe that a lottery by any other name will smell as bad.

This selling by lottery seems to have prevailed largely where it least should have prevailed, namely, in the sale of penny candy to little children. The Federal Trade Commission's brief cites eighteen of these candy cases initiated by it and sustained by the Circuit Courts of Appeal and the United States Supreme Court since the decision of the Keppel case above cited. These cases are collected in the notes of Section 45 of Title 15, U.S.C.A.on pages 66-75 of the supplement, and see note 5 of 43 Yale Law Journal 1339. See also In the matter of Boyd Houser Candy Company and In the matter of The Newton Products Company,

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Volume 4 Federal Register, No. 27, page 607. It has not always been so limited. As long ago as 1918 we find the Federal Trade Commission prohibiting the sale of tea and coffee with coupons for prizes concealed in certain packages, Federal Trade Commission v. Brumage-Loeb Co., Successor to Buddha Tea Co., 1918, 1 F.T.C. 159, Federal Trade Commission v. Everybody's Mercantile Co., 1920, 3 F.T.C. 60, and only recently the commission was sustained in its objection to the sale of silk stockings by punch cards, Chicago Silk Company v. Federal Trade Commission, 7 Cir. 1937, 90 F.2d 689, certiorari denied, 1938, 302 U.S. 753, 58 S.Ct. 281, 82 L.Ed. 582. And see also as to the sale of gas and oil an injunction by competitor, Jones V. Smith Oil & Refining Company, 1938, 295 Ill.App. 519, 15 N.E.2d 42; 29 Journal of Criminal Law and Criminology 598.

The petitioners and the other practitioners of this type of merchandising have followed that ancient precept of the sea, 'women and children first', except that they pervert instead of protect weakness. Taking candy from children has never been highly regarded. Forcing it upon them through their possession of an instinct that the adult world recognizes and has always recognized as at the bottom of many of its troubles, seems to us shameful. We have rarely seen of a more unpleasant example of commercial cynicism than is disclosed by the testimony of the petitioners' president, Ira W. Minter:

'Q. In your opinion, Mr. Minter, is this form of advertising injurious to the public? A. The public benefits by it.

'Q. In what way would you say the public benefits by it? A. By getting additional value for the purchase of the particular goods that it is being offered with '. Record, p. 148.

The 'benefit' and 'additional value' so euphemistically referred to, is our old friend 'something for nothing', the consequences of too enthusiastic pursuit of which are known to judges in their official capacities.

In view of the controlling decision of the Supreme Court in Federal Trade Commission v. Keppel & Bros., above cited, any extended discussion of the law is inappropriate. Petitioners attempt three distinctions. Two of them touch upon the judicial history of its interpretation. They say, first, that the Federal Trade Commission has no statutory power because the whole candy manufacturing business is infected with the 'break and take' virus. In the light of the sentiments we have just expressed, we should be loath to believe this of any body of business men. Happily we do not have to. First, the witnesses making this depressing assertion, Minter and Coughlin, the president and candy broker of the petitioners, are somewhat interested. Second, it is flatly contradicted by two other candy manufacturers called by the Commission, Voneiff, p. 39, and Roskamm, p. 102. Although the latter's business reformation was not altogether voluntary (cease and desist order), he did not limit himself to his own business but referred to earlier and, to him, more Halcyon days in the trade generally, saying: 'in the days when break and take were so actively sold in a much larger volume...

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