Argus Cameras v. Hall of Distributors

• Decision Date: 03 October 1955
• Docket Number: No. 61,61
• Citation: 72 N.W.2d 152,343 Mich. 54
• Parties: ARGUS CAMERAS, Inc., Plaintiff and Appellee, v. HALL OF DISTRIBUTORS, Inc., et al., Defendants and Appellants. Motion
• Court: Michigan Supreme Court

Page 152

72 N.W.2d 152

343 Mich. 54

ARGUS CAMERAS, Inc., Plaintiff and Appellee, v. HALL OF DISTRIBUTORS, Inc., et al., Defendants and Appellants.

Motion No. 61.

Supreme Court of Michigan.

Oct. 3, 1955.

Nathan L. Milstein and Charles Rubiner, Detroit, for defendants and appellants, Arthur James Rubiner, Detroit, of counsel.

Clark, Klein, Brucker & Waples, Detroit, for plaintiff and appellee, Robert C. Winter, Wilber M. Brucker, Jr., Detroit, George M. Chapman, New York City, of counsel.

Before the Entire Bench, except SMITH, J.

REID, Justice.

Upon leave granted, defendants appeal from a temporary injunctive order of the circuit court. Plaintiff filed the bill in chancery seeking to enjoin defendants from tortiously interfering with plaintiff's contracts with wholesalers and retailers, to which contracts the defendants are not parties; from inducing breaches of plaintiff's said contracts and from conspiring and committing acts tending to restrain trade and to create a monopoly in the sale of plaintiff's products bearing plaintiff's trademark.

Plaintiff a manufacturer of cameras, etc., and alleges that defendants are retailers who sell plaintiff's products but who are not parties to any fair trade agreement, either with plaintiff or with any of plaintiff's wholesalers or distributors. Plaintiff charges that defendants have tortiously interfered with plaintiff's contracts and that defendants have induced dealers to breach their contracts. Defendants admit that they have sold plaintiff's products for less than the price established in the contracts between plaintiff and signers of contracts with plaintiff. Defendants maintain that as non-signers they are within their legal rights in setting their own prices for such products. Defendants further deny that they have tortiously interfered with any of plaintiff's contracts or induced any breach thereof.

Plaintiff claims that defendants obtained Argus cameras by inducing other dealers to breach their contracts; that they use the goods thus obtained to cut prices; that the defendants by cutting prices, interfere with the contract Argus has with other dealers; that the defendants are fast creating a monopoly. Plaintiff claims further that the defendants profit by an increase in their volume of sales at the expense of Argus and its dealers who have created the demands for the goods that the defendants sell; that the defendants' interest therefore must be weighed against the interest and investment of plaintiff Argus and the hundreds of other retailers who wish to profit by the sale of Argus products; plaintiff further claims that the defendats' selfish interests must be weighed against the desire of consumers to be able to purchase Argus cameras from their regular camera dealers instead of from price cutters; plaintiff further claims that the desire of defendants to cut prices must be further weighed against the inherent monopoly in the course that defendants pursue. The temporary injunction granted by the trial court is as follows:

'It is hereby ordered that a temporary injunction shall be issued.

'And it is further ordered that the said defendants, and each of them, their respective officers, directors, agents employees, servants, affiliates, successors, heirs and assigns, and all persons acting in concert or participation with them or any of them, are hereby strictly commanded, restrained and enjoined

'(a) From interfering with the operation and effect of and from impairing or otherwise depriving Argus Cameras, Inc. of the benefits of its fair trade contracts and its lawful right in the State of Michigan to confine the distribution of its trade-marked products solely through wholesale and retail distributors and dealers who are willing to enter into such contracts by mailing or otherwise disseminating in the State of Michigan circulars, catalogs, mailing pieces or any other form of advertising, or in any other manner offering for sale or selling or delivering for sale in the State of Michigan any Argus products, bearing its trade-mark and covered by plaintiff's said fair trade contracts, at less than the prices established thereby as the same are in force and effect from time to time and of which the defendants shall have notice;

'(b) From inducing or attempting to induce wholesale and/or retail distributors and dealers of Argus products to violate their contracts with Argus Cameras, Inc. by purchasing Argus products from any retailer at less than the minimum prices established pursuant to an Argus retailer fair trade contract in effect between such retailer and Argus Cameras, Inc., or by purchasing any Argus product from any wholesaler in violation of the provisions of an Argus wholesaler fair trade contract in effect with such wholesaler, or by inducing any retailer to enter into an Argus retailer fair trade contract with Argus Cameras, Inc. for the purpose of supplying any Argus product to defendants or any of them in violation of such contract, from purchasing, directly or indirectly, Argus products from any person, firm or corporation which has entered into an Argus retailer fair trade contract or an Argus wholesaler fair trade contract, where defendants, or any of them, have notice of knowledge of such contract, and from inducing or attempting to induce wholesale and retail distributors and dealers of Argus products to violate their contracts with Argus Cameras, Inc. either directly or by means of any subterfuge, sham or other indirection;

'until the further order of this Court.'

The act under which the contracts between plaintiff Argus and its wholesalers and distributors were executed, is P.A.1937, No. 50, C.L.1948, § 445.151 et seq., Stat.Ann.1953 Cum.Supp. § 19.321 et seq.

Defendants rely upon the decision of this court in Shakespeare Co. v. Lippman's Tool Shop Sporting Goods Co., 334 Mich. 109, 54 N.W.2d 268. In the Shakespeare Case we say (syl. 1):

'State statute declaring that advertising, offering for sale or selling of a commodity which bears the trade-mark, brand, or name of the producer or owner and which is in fair and open competition with commodities of the same general class at a price that is less than that set by the producer or vendor is unfair competition and actionable at the suit of any person damaged thereby is unconstitutional as applied to persons who have not signed a socalled fair-trade agreement whereby they agree to abide by the producer's minimum prices on the products, since it constitutes a deprivation of property without due process of law (Const. 1908, art. 2, § 16; C.L.1948, § 445.151 et seq.).'

Defendants claim there is considerable doubt as to whether they would be guilty of plaintiff's charges even if the defendants did induce the nonperformance of plaintiff's fair-trade contracts by their wholesalers and distributors, for the purpose of acquiring merchandise.

We quote from Restatement, Torts, § 774, as follows:

'One is privileged by proper means to induce the non-performance of a contract or bargain, the purpose or effect of which is to restrict his business opportunities in violation of a defined public policy.

'Comment:

'a. The privilege stated in this section enables a person to protect himself by proper means against restrictions on his business opportunities when the restrictions violate a defined public policy. In some case such a restriction may be the avowed purpose of the interrupted arrangement; in others this may be the effect, in view of the administration of the arrangement or other circumstances, whether or not it is the purpose. It is not enough, however, that the contract or bargain involved restricts the actor's business opportunities. Every contract limits in some degree the opportunities of persons not parties to the contract. Such a restriction is ordinarily deemed desirable both in the public and the private interest. However, some restrictions may work prejudice to both interests. Accordingly, contracts in unreasonable restraint of trade are generally unenforceable even against the contracting party. The rule stated in this section is not limited, however, to such contracts. Though the contract may be enforceable in some manner between the parties, one whose business opportunities are restricted by it may be able to survive only through a breach of the restriction; and this breach he is privileged to seek by proper means, if the restriction violates public policy.'

Defendants further claim that the public policy of Michigan was set forth in the Shakespeare Case, supra. Defendants seem not to dispute that the fair trade contracts entered into between plaintiff Argus and its wholesalers and distributors are valid as between the parties to such contracts, but defendants claim that as to non-signers of such contracts, such non-signers are guiltless of tort, though they purchase from a signer.

Under the allegations contained in the bill, plaintiff fails to state a case for equitable relief, in view of the dicision of this court in the Shakespeare Case. We consider that the Shakespeare Case, supra, laid down a principle of law, the fair implication of which is such that under the law of Michigan thus established, defendants non-signers (of so-called fair trade agreements with plaintiff) must not be enjoined from purchasing the products of plaintiff Argus from signers, nor from selling the products at prices less than prices fixed by plaintiff.

The temporary injunctive order is reversed. We remand the case to the trial court for further proceedings if any. Costs to defendants.

CARR, C. J., and SHARPE and DETHMERS, JJ., concurred with REID, J BUTZEL, Justice (dissenting).

The sole question before us is the propriety of the trial court's order granting the preliminary injunction. In Niedzialek v. Journeymen Barbers, Hairdressers & Cosmetologists' International Union of America, Local 552, A.F.L., 331 Mich. 296, 49 N.W.2d 273, a suit to restrain picketing, we adopted the...