Bulova Watch Co. v. Zale Jewelry Co. of Cheyenne

• Decision Date: 08 May 1962
• Docket Number: 3053,Nos. 3077,3098,S-CASPE,INC,s. 3077
• Citation: 371 P.2d 409
• Parties: BULOVA WATCH COMPANY, a New York Corporation, Appellant (Plaintiff below), v. ZALE JEWELRY COMPANY OF CHEYENNE, a Texas Corporation, Appellee (Defendant below). OLIN MATHIESON CHEMICAL CORPORATION, a Virginia Corporation, Plaintiff, v. Claude E. BROWN and Mrs. Blanche Brown, d/b/a Claude Brown Sporting Goods Store, Defendants. BULOVA WATCH COMPANY, a New York Corporation, Plaintiff, v. ZALE', a Texas Corporation, Defendant.
• Court: Wyoming Supreme Court

Page 409

371 P.2d 409 BULOVA WATCH COMPANY, a New York Corporation, Appellant (Plaintiff below),
v.
ZALE JEWELRY COMPANY OF CHEYENNE, a Texas Corporation, Appellee (Defendant below).
OLIN MATHIESON CHEMICAL CORPORATION, a Virginia Corporation, Plaintiff,
v.
Claude E. BROWN and Mrs. Blanche Brown, d/b/a Claude Brown Sporting Goods Store, Defendants.
BULOVA WATCH COMPANY, a New York Corporation, Plaintiff,
v.
ZALE'S-CASPER, INC., a Texas Corporation, Defendant. Nos. 3077, 3053, 3098. Supreme Court of Wyoming. May 8, 1962.

Page 410

No. 3077:

Louis A. Mankus, Cheyenne, for appellant.

A. Joseph Williams and Brooke Wunnicke, Cheyenne, for appellee.

No. 3053:

Edward T. Lazear and Richard F. Pickett, of Loomis, Lazear & Wilson, Cheyenne, for plaintiff.

G. R. McConnell and Walter Scott, Laramie, for defendants.

No. 3098:

Submitted upon record reserved questions and on briefs and oral arguments in Cases Nos. 3077 and 3053.

Before BLUME, C. J., and PARKER, HARNSBERGER, and McINTYRE, JJ.

Mr. Justice HARNSBERGER delivered the opinion of the court.

In three separate actions consolidated for presentation to this court the constitutionality of Wyoming's Fair Trade Act is challenged.

The Act appears as Chapter 2, Title 40, §§ 40-8 to 40-17 inclusive, W.S.1957, and those of its provisions deemed important to this decision are as follows:

§ 40-10. Contracts fixing minimum sale or resale price authorized for commodities sold under trade-mark, brand name, etc.--No contract relating to the sale or resale of a commodity which bears, or the label or container of which bears, the trade-mark, brand, or name of the producer or distributor of such commodity and which commodity is in free and open competition with commodities of the same general class produced or distributed by others shall be deemed in violation of any law of the State of Wyoming by reason of any of the following provisions which may be contained in such contract:

'(A) That the buyer will not resell such commodity at less than the minimum price stipulated by the seller.

'(B) That the buyer will require of any dealer to whom he may resell such commodity an agreement that he will not, in turn, resell at less than the minimum price stipulated by the seller.

'(C) That the seller will not sell such commodity:

'(1) to any wholesaler, unless such wholesaler will agree not to resell the same to any retailer unless the retailer will in turn agree not to resell the same except to consumers for use and at not less than the stipulated minimum price, and such wholesaler will likewise agree not to resell the same to any other wholesaler unless such other wholesaler will make the same agreement with any wholesaler or retailer to whom he may resell; or

'(2) to any retailer, unless the retailer will agree not to resell the same except to consumers for use and at not less than the stipulated minimum price. (Laws 1937, ch. 58, § 2; C.S. 1945, § 39-302.)'

§ 40-11. Acts deemed to be violations of contracts fixing minimum prices.--For the purpose of preventing evasion of the resale price restrictions imposed in respect of any commodity by any contract entered into pursuant to the provisions of this act [§§ 40-8 to

Page 411

40-17] (except to the extent authorized by the said contract):

'(A) The offering or giving of any article of value in connection with the sale of such commodity;

'(B) The offering or the making of any concession of any kind whatsoever (whether by the giving of coupons or otherwise) in connection with any such sale; or

'(C) The sale or offering for sale of such commodity in combination with any other commodity, shall be deemed a violation of such resale price restriction, for which the remedies prescribed by section 6 of this act [§ 40-14] shall be available. (Laws 1937, ch. 58, § 3; C.S. 1945, § 39-303.)'

§ 40-12. Who may establish minimum price.--No minimum resale price shall be established for any commodity, under any contract entered into pursuant to the provisions of this act [§§ 40-8 to 40-17], by any person other than the owner of the trade-mark, brand or name used in connection with such commodity or a distributor specifically authorized to establish said price by the owner of such trade-mark, brand or name. (Laws 1937, ch. 58, § 4; C.S.1945, § 39-304.)'

§ 40-14. Wilful violation of minimum price contract as unfair competition.--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 [§§ 40-8 to 40-17], 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. (Laws 1937, ch. 58, § 6; C.S.1945, § 39-306.)' (Emphasis supplied.)

This last section is generally referred to as the 'nonsigner' provision.

In the interest of brevity, where reference is made to trade-mark, brand, name, et cetera, the single word trade-mark will be used and the single word producer will be used to include manufacturer or distributor where proper, and reference to the Fair Trade Act may be made by use of the single word Act.

The specific constitutional questions reserved to this court in case number 3098 are as follows:

'Question No. 1. Do the provisions of Section 40-8 to 40-17, Wyoming Statutes, 1957, violate Section 6, Article I, of the Constitution of the State of Wyoming?

'Question No. 2. Do the provisions of Section 40-8 to 40-17, Wyoming Statutes, 1957, violate Section 37, Article I of the Constitution of the State of Wyoming?

'Question No. 3. Do the provisions of Section 40-8 to 40-17, Wyoming Statutes, 1957, violate Section 1, Article II, of the Constitution of the State of Wyoming?

'Question No. 4. Do the provisions of Section 40-8 to 40-17, Wyoming Statutes, 1957, violate Section 1, Article III of the Constitution of the State of Wyoming?

'Question No. 5. Do the provisions of Section 40-8 to 40-17, Wyoming Statutes, 1957, violate Section 8, Article X of the Constitution of the State of Wyoming?'

In addition to these questions, in case number 3053 we are asked the following:

'1. Are Sections 40-8 through 40-17, Wyoming Statutes 1957 known as the 'Fair Trade Act', upon which the Complaint filed herein is based, in conflict with and in violation of Section 1 of the XIV Amendment to the Constitution of the United States, which provides:--'No state shall make or enforce any law which shall abridge the privileges and immunities of citizens of the United States; nor shall any state deprive any person of life, liberty or property, without due process of law; nor deny to any

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person within its jurisdiction the equal protection of the laws'?

'2. Are Sections 40-8 through 40-17, Wyoming Statutes 1957 known as the 'Fair Trade Act' in conflict with and in violation of Section 7, Article I of the Constitution of the State of Wyoming, which provides that:--'Absolute, arbitrary power over the lives, liberty and property of freemen exists no where in a republic, not even in the largest majority'?

'4. Are Sections 40-8 through 40-17, Wyoming Statutes 1957 known as the 'Fair Trade Act' in conflict with and in violation of Section 30, Article I of the Constitution of the State of Wyoming, which provides that:--'Perpetuities and monopolies are contrary to the genius of a free state and shall not be allowed. Corporations being creatures of the state, endowed for the public good with a portion of its sovereign powers, must be subject to its control'?'

In the appeal taken in case number 3077, the State and Federal Constitutional provisions claimed to have been violated by the Fair Trade Act are: The due process portion of the Fourteenth Amendment of the Federal Constitution; the due process clause, Art. 1, § 6, Wyoming Constitution; Art. 1, § 37, Wyoming Constitution, making the Constitution of the United States the supreme law of the land; Art. 2, § 1, Wyoming Constitution, dividing powers of government into the distinctive departments of legislative, executive and judicial; and Art. 10, § 8, Wyoming Constitution, prohibiting consolidations and combinations of corporations of any kind whatever to prevent competition, to control or influence prices. Appellant also contended that the Act is an unlawful delegation of legislative power and therefore is violative of Art. 3, § 1, Wyoming Constitution, which vests legislative power in the legislature of this State, and that the Act is an arbitrary, improper and unreasonable exercise of police power without any substantial relation to the public bealth, safety or general welfare.

At the risk of being unnecessarily repetitious of what has been recounted in numerous opinions, we present a brief history of the development of Fair Trade Laws.

On July 2, 1890, the Congress enacted a law to protect trade and commerce against unlawful restraints and monopolies. This law is known as the Sherman Anti-Trust Act, 26 Stat. 209, 15 U.S.C.A. §§ 1-7. In 1911, the Federal court in Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502, held that price-fixing contracts between manufacturers and dealers were in restraint of trade. By further enactment of September 26, 1914, 38 Stat. 717, 15 U.S.C.A. § 41, Congress created a Federal Trade Commission, declaring in its section 5 (now 15 U.S.C.A. § 45(a)) that unfair methods of competition were unlawful. Thereafter on August 17, 1937, Congress, by what has become known as the Miller-Tydings Amendment, 50 Stat. 693, 15 U.S.C.A. § 1, legalized

'* * * contracts or agreements prescribing minimum prices for the resale of a commodity which bears, or the label or container of which bears, the trade mark, brand, or name of the producer or distributor of such commodity and which is in free and open competition with commodities of the same general class produced or distributed by others, when contracts or agreements of that...