361 P.2d 297 (Okla. 1961), 38958, American Home Products Corp. v. Homsey

Docket Nº:38958, 38968.
Citation:361 P.2d 297
Party Name:AMERICAN HOME PRODUCTS CORPORATION, a corporation, Plaintiff in Error, v. Benny HOMSEY and Associates, doing business as American Mutual Company, Defendant in Error. REVLON, INC., a corporation, Plaintiff in Error, v. AMERICAN MUTUAL COMPANY, an unincorporated Association, Defendant in Error.
Case Date:April 18, 1961
Court:Supreme Court of Oklahoma
 
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Page 297

361 P.2d 297 (Okla. 1961)

AMERICAN HOME PRODUCTS CORPORATION, a corporation, Plaintiff in Error,

v.

Benny HOMSEY and Associates, doing business as American

Mutual Company, Defendant in Error.

REVLON, INC., a corporation, Plaintiff in Error,

v.

AMERICAN MUTUAL COMPANY, an unincorporated Association,

Defendant in Error.

Nos. 38958, 38968.

Supreme Court of Oklahoma.

April 18, 1961.

Page 298

Syllabus by the Court

1. As a general rule, in the absence of some legal or contractual duty, the owner of goods may dictate the price at which he will sell them.

2. The Oklahoma Fair Trade Act, 78 O.S.1951 § 41 et seq., is in reality a selective price control act which leaves to the producer of trademark commodities the arbitrary right to determine if and when it shall take effect. It grants to a private party the privilege of creating a right of action for its own benefit or suspending that right at its will.

3. The purported authority to fix prices binding on nonsigners under the Oklahoma Fair Trade Act, 78 O.S.1951 § 41 et seq., is an unconstitutional exercise of legislative power in that it delegates to private persons the right to prescribe a rule governing conduct for the future which is binding upon those who do not consent; it fails to provide any standard or condition as to the necessity of the act, provides for no hearing or safeguards, and is not subject to review.

4. Since there is no closed class or category of business affected with a public interest, the court in applying the due process sections of the Oklahoma Constitution, will determine in each case whether the circumstances are such as to justify the challenged legislation as a reasonable exertion of governmental authority or condemn it as unreasonable, arbitrary and discriminatory. Furthermore the mere recital in the Act of the reasons for or conditions which gave rise to the enactment are not controlling on the courts so that they must declare that to be which palpably is not.

5. Section 44 of the Oklahoma Fair Trade Act (78 O.S.1951 § 41 et seq.) which provides that the sale of trademarked items at a price less than that stipulated to is a violation of the Act whether the seller is a party to the stipulated price contract or not, is unconstitutional and void as an arbitrary and unreasonable exercise of the police power without a substantial relation to the public health, safety or general welfare insofar as it concerns persons who are not parties to the price contracts.

Appeal from the District Court of Oklahoma County; A. P. VanMeter, Judge.

Actions by American Home Products Corporation and Revlon, Inc. under the provisions of Fair Trade Act, 78 O.S.1951 §§ 41-45, to restrain defendants from alleged violation of said Act. From judgment for defendants the plaintiffs appeal. Affirmed.

John G. Hervey and Hugh F. Owens, Oklahoma City, for plaintiff in error American Home Products Corp.

Granville Scanland, Oklahoma City, for plaintiff in error Revlon, Inc.

Miskovsky & Miskovsky, Oklahoma City, for defendants in error.

Page 299

DAVISON, Justice.

Plaintiffs, American Home Products Corporation and Revlon, Inc., brought separate actions in the lower court to enjoin the defendants from selling certain products bearing the trademark, brand or name of the respective plaintiffs, below the prices set by the plaintiffs pursuant to the Oklahoma Fair Trade Act, 78 O.S.1951 § 41 et seq., Oklahoma Session Laws 1937, p. 479, Secs. 1 to 6. The defendants answered that the 'nonsigner' provision of the Fair Trade Act violated the provisions of the Oklahoma Constitution and was unconstitutional.

The cases were consolidated for trial in the lower court and were presented on a stipulation of facts. It was stipulated, inter alia, that defendants were retail distributors of merchandise with one store and that plaintiffs were producers and sellers of products throughout the United States and in Oklahoma bearing their respective trademarks, brands and names and that these products were in fair and open competition with products of the same general class produced by others; that pursuant to the Fair Trade Act the plaintiffs had previously entered into written retail sales contracts with certain retailers in Oklahoma providing minimum retail sales prices as therein fixed or as fixed by any amendments thereof. It was also stipulated that defendants had not entered into any such contracts with plaintiffs, and with knowledge of said contractual prices, did sell the products of the plaintiffs, title to which was in defendants, at retail prices less than the prices fixed by the contracts with some other retailers and that such sales were not within any exceptions in the Act; and further, although not admitted by defendants as a fact, that witnesses of plaintiffs would testify that plaintiffs had and would suffer irreparable damage to their business, trademark and goodwill, because of defendants' acts.

It was further stipulated that the defendants had complied with the Oklahoma Unfair Sales Act, 15 O.S.1951 § 598.1 et seq., Oklahoma Session Laws 1949, p. 103, § 1 et seq., and that said Act was not an issue in the cases.

Under the issues and the stipulation there was presented to the trial court the sole question of whether the 'nonsigner' provision of the Fair Trade Act violated certain provisions of the Oklahoma Constitution. (It is therefore unnecessary for us to discuss the Sherman Anti-Trust Act, the Miller-Tydings Act or the McGuire Act.) The trial court refused to enjoin the defendants and held the nonsigner provision of the Fair Trade Act unconstitutional and void as being (1) an improper delegation of legislative power of price fixing to private persons in violation of Art. 4, Sec. 1, and Art. 5, Sec. 1, and (2) in violation of the due process provisions (Art. 2, Secs. 2 and 7), in that there was no real and substantial relation between the price fixing provisions as...

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