Bissell Carpet Sweeper Co. v. Shane Co.

• Decision Date: 22 May 1957
• Docket Number: No. 29327,29327
• Citation: 237 Ind. 188,143 N.E.2d 415
• Parties: BISSELL CARPET SWEEPER COMPANY, Appellant, v. SHANE COMPANY, Inc., Appellee.
• Court: Indiana Supreme Court

Page 415

143 N.E.2d 415

237 Ind. 188

BISSELL CARPET SWEEPER COMPANY, Appellant, v. SHANE COMPANY, Inc., Appellee.

No. 29327.

Supreme Court of Indiana.

May 22, 1957.

Rehearing Denied Sept. 17, 1957.

Bernard Landman, Jr., Charles B. Feibleman, Bamberger & Feibleman, Indianapolis, of counsel, for appellant.

Rochford, Blackwell & Rochford, Indianapolis, for appellee. R. Stanley Lawton, Wesley A. Dierberger, Alan H. Lobley, Ross, McCord, Ice & Miller, Indianapolis, of counsel, for General Electric Co., amicus curiae.

Richard S. Melvin, Gary, Thomas A. Rothwell, Chicago, Ill., of counsel, for American Fair Trade Council, Inc., Hamilton Manufacturing Corp., Indiana Retail Hardware Ass'n, South Bend, Balt Co., The Anderson Co., The Magnavox Co., and The Pinex Co., Inc., as amici curiae.

EMMERT, Judge.

This is an appeal from a judgment entered for failure of appellant to amend and plead over after a demurrer had been sustained to its complaint.

Appellant, a Michigan corporation, alleged by its complaint it manufactured carpet sweepers, which had thereon its trade-mark 'Bissell Carpet Sweeper Company,' which were sold in open competition in Indiana 'with merchandise in the same general class produced by others'; that appellee was engaged in the retail business in the city of Indianapolis; that appellant had entered into voluntary contracts with certain retailers including H. P. Wasson & Co., pursuant to the Indiana Fair Trade Act which established minimum prices for its carpet sweepers throughout the state; that the appellee did not execute any 'such contract to establish such minimum resale prices,' but that prior to the filing of the complaint appellant gave written notice to the appellee that such contracts were in existence, but that appellee wilfully and knowingly offered for sale and did sell the carpet sweepers at less than the minimum prices established by appellant's contract, and that the sale did not come within any of the exceptions provided for in § 5 of the Fair Trade Act. The demurrer for want of facts questioned the constitutional powers of the General Assembly to prohibit the appellee from selling Bissell Carpet Sweepers at less than the price established by the appellant with its contract retailers.

The Fair Trade Act, Ch. 17 of the 1937 Acts (§§ 66-301 to 66-309, Burns' 1951 Replacement), is limited to commodities using a trade-mark, brand or name, of a producer or distributor, and sold in free and open competition with commodities of the same general class produced or distributed by others. Section 66-302, Burns' 1951 Replacement, declares valid contracts between a seller and a buyer, or a series of contracts between successive sellers and buyers for sale at wholesale or retail, requiring the ultimate retailer to contract not to sell the commodities at less than the fair trade price established by the original seller. A could sell to B with B contracting he would not sell at retail below the price fixed by A, or with B contracting that if he sold to retailer C he would require of C a contract not to sell at retail below the price fixed by A, or if C sold to D for resale, he would require of D a similar provision for the benefit of A, who would fix the minimum retail price. Thus, the fair trade price required of the ultimate retailer could be established by contract, or a series of subsequent contracts for the benefit of the first seller establishing the fair trade price. The ultimate retailer would be bound because of his contract, and not because a statute said he should be bound when he did not consent.

The price fixing authorized by this section is somewhat similar to the factual situation in Dr. Miles Medical Co. v. John D. Park & Sons Co., 1911, 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502. The Court, in an opinion by Mr. Justice Hughes, summarized the contracts by saying they provided 'a system of interlocking restrictions by which the complainant seeks to control not merely the prices at which its agents may sell its products, but the prices for all sales by all dealers at wholesale or retail, whether purchasers or subpurchasers, and thus to fix the amount which the consumer shall pay, eliminating all competition.' 220 U.S. at page 399, 31 S.Ct. at page 381. The Court held the contracts were an invalid restraint of trade both at common law and under the Sherman Anti-Trust Act of July 2, 1890, 15 U.S.C.A. §§ 1-7, 15 note.

It is within the power of the General Assembly to change the common law rule in Indiana, and to except fair trade price fixing by contracts between buyers and sellers from the various provisions of the restraint of trade acts of this state.

The Miller-Tydings Act of 1937 (15 U.S.C.A. § 1) amended the Sherman Anti-Trust Act and the Federal Trade Commission Act, 15 U.S.C.A. § 45 to make lawful price fixing contracts in interstate commerce if they were lawful in intrastate commerce. In Schwegmann Bros. v. Calvert Distillers Corp., 1951, 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035, it was held price fixing by compulsion was not validated by the Act. The Court clearly noted the distinction by the following language:

'* * * If a distributor and one or more retailers want to agree, combine, or conspire to fix a minimum price, they can do so if state law permits. Their contract, combination, or conspiracy--hitherto illegal--is made lawful. They can fix minimum prices pursuant to their contract or agreement with impunity. When they seek, however, to impose price fixing on persons who have not contracted or agreed to the scheme, the situation is vastly different. That is not price fixing by contract or agreement; that is price fixing by compulsion. That is not following the path of consensual agreement; that is resort to coercion.' 341 U.S. at page 388, 71 S.Ct. at page 747, 95 L.Ed. at page 1045. ¹

The appellant Bissell bases its cause of action on § 6 of the Fair Trade Act, which states:

'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 [§§ 66-301-66-309], 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.' Section 66-306, Burns' 1951 Replacement [Acts 1937, ch. 17, § 6, p. 53].

The complaint specifically alleges the appellee Shane was not a party to any contract to fix the retail price. It fails to allege from whom Shane purchased the sweepers or when they were purchased. For all that was alleged, Shane could have purchased them in Michigan where fair trade price fixing is illegal. Shakespeare Co. v. Lippman's Tool Shop Sporting Goods Co., 1952, 334 Mich. 109, 54 N.W.2d 268; Argus Cameras v. Hall of Distributors, 1955, 343 Mich. 54, 72 N.W.2d 152. Appellant's position is that wilfully and knowingly selling and offering for sale Bissell's sweepers at prices less than fixed by Bissell after notice of the contracts to which Shane was not a party entitled Bissell to relief. ²

We are not at liberty to substitute our judgment for that of the General Assembly as to whether price fixing is good or bad for the economic life of the state. Conceivably, in a time of depression the benefits might outweigh the disadvantages, while the converse may be true in a time of prosperity or inflation. But the Indiana Constitution on separation of powers and the vesting of the right to enact laws in the General Assembly have the same meaning whatever may be the business or economic conditions of the State.

The right to fix a utility rate, which is price fixing for the service, is a legislative act. State ex rel. Evansville City Coach Lines v. Rawlings, 1951, 229 Ind. 552, 99 N.E.2d 597, and authorities therein cited. After the Legislature has enacted that the rates be just and reasonable, it can delegate to an administrative commission the duty of finding as a fact what charge would be just and reasonable, but the commission does not make a law. The law operates on the facts found by the commission under proper standards and after a hearing. The rate is legislative in character because it makes a rule for the future, and binds both the utility and the users of its services whether they consent or not. Prentis v. Atlantic Coast Line Co., 1908, 211 U.S. 210, 29 S.Ct. 67, 53 L.Ed. 150; Chicago, I. & L. R. Co. v. Railroad Comm., 1911, 175 Ind. 630, 643, 95 N.E. 364; In re Northwestern Indiana Tel. Co., 1930, 201 Ind. 667, 684, 171 N.E. 65. Both the Legislature and the commission exercise a sovereign power of government.

A fortiori, § 66-306, Burns' 1951 Replacement, is broad enough to vest a legislative power to fix prices in private persons. But the Constitution says 'The Legislative authority of the State shall be vested in the General Assembly * * *.' Article 4, Section 1. The power to legislate or to exercise a legislative function cannot be delegated to a non-governmental agency or person. Tucker v. State, 1941, 218 Ind. 614, 697, 698, 35 N.E.2d 270. ³ Nor can the Legislature delegate its law making power to a governmental officer, board, bureau or commission. Langenberg v. Decker, 1892, 131 Ind. 471, 479, 31 N.E. 190, 16 L.R.A. 108; Blue v. Beach, 1900, 155 Ind. 121, 133, 56 N.E. 89, 50 L.R.A. 64; Sarlls v. State ex rel. Trimble, 1929, 201 Ind. 88, 110, 166 N.E. 270, 67 A.L.R. 718; Edwards v. Housing Authority of City of Muncie, 1939, 215 Ind. 330, 339, 19 N.E.2d 741; Financial Aid Corp. v. Wallace, 1939, 216 Ind. 114, 120, 33 N.E.2d 472, 125 A.L.R. 736; Hollingsworth v. State Board of Barber Examiners, 1940, 217 Ind. 373, 377, 28 N.E.2d 64; Town of Kirklin v. Everman, 1940, 217 Ind. 683, 693, 28 N.E.2d 73, 29 N.E.2d 206. We are not concerned with a statute which places upon an official a duty to execute a law made by the Legislature, or where the law fixes a reasonable and fair rate, price or charge and delegates to a...