Black & Decker Mfg. Co. v. Ann & Hope, Inc. of Danvers

• Decision Date: 14 January 1972
• Citation: 361 Mass. 18,277 N.E.2d 687
• Parties: , 1972 Trade Cases P 73,806 The BLACK AND DECKER MANUFACTURING COMPANY v. ANN & HOPE, INC. OF DANVERS.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 687

277 N.E.2d 687

361 Mass. 18, 1972 Trade Cases P 73,806

The BLACK AND DECKER MANUFACTURING COMPANY v. ANN & HOPE, INC. OF DANVERS.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Sept. 16, 1971.

Decided Jan. 14, 1972.

H. Erik Lund, Boston (Martin B. Shulkin, Boston, with him), for plaintiff.

Barry Ravech, Boston, for defendant.

Before TAURO, C.J., and CUTTER, REARDON and QUIRICO, JJ.

QUIRICO, Justice.

This is a bill in equity brought under the provisions of G.L. c. 93, §§ 14A--14D (Fair Trade Law), seeking relief in the form of an injunction and money damages by reason of the defendant's alleged unfair competition. The defendant's demurrer to the bill was sustained. Although the plaintiff was not denied leave to amend its bill, it did not move to do so and the bill was dismissed. Rule 23 of the Superior Court (1954). The case is before us on the plaintiff's appeals from the interlocutory decree sustaining the demurrer and from the final decree dismissing the bill.

The bill alleges in substance that the plaintiff manufactures and sells power tools which are identified by a brand name and trade mark owned exclusively by it and which are distributed throughout Massachusetts and elsewhere; that its products are of standard quality and compete freely and openly in the Commonwealth and elsewhere with similar products produced and sold by others; that pursuant to the Fair Trade Law it has entered into 'fair trade contracts, all in the same form, with Massachusetts retailers . . . wherein the said retailers have agreed that they will not advertise, offer for sale or sell products of the plaintiff listed in a schedule attached to such agreement bearing the plaintiff's trademark, brand or name at less than the prices set forth in the said schedule'; that the defendant, knowing of the plaintiff's fair trade contracts with other retailers and having been notified by the plaintiff of the existence of such contracts and of the prices stipulated thereunder, 'thereafter willfully and knowingly advertised, offered for sale and sold, at retail, plaintiff's products at prices below the minimum retail resale prices contained in said . . . contracts.' The bill further alleges that the defendant's conduct was not justified under any of the exceptions contained in § 14A of the Fair Trade Law, and that, as a result, it constituted unfair competition in violation of § 14B of the law. ¹ The bill does not allege that the defendant ever signed a fair trade contract with the plaintiff.

Attached to and incorporated in the plaintiff's bill is a copy of its standard fair trade contract and a 'Fair Trade Retail Price List' in effect at all dates material to this case. Each of the price lists identifies the plaintiff's products by catalogue number and description, and for each product it gives a price in a column entitled 'Minimum Retail.' Each price list included the following pertinent language: 'The products listed above shall . . . (not) be sold . . . by Retailers at less than said fair trade retail price. . . . Unless otherwise prohibited by law, a bona fide cash discount may be given by a Retailer in an amount not exceeding three per cent (3%) of the minimum retail selling price only under the following terms and conditions: 1. The discount must be in the form of cash, trading stamps, coupons, cash register receipts or analogous form. 2. The discount must be given as a matter of the Retailer's general policy and not on Black and Decker products alone. 3. Black and Decker products must continue to be advertised and offered for sale at the minimum retail price as set out in this Schedule . . .. 4. The discount shall not be given solely for the purpose of selling trademarked Black and Decker products below the established minimum retail price.'

The defendant's demurrer to the bill as a whole was sustained on the fourth ground stated therein to the effect that '(t)he plaintiff has not set forth an equitable claim for relief because it has, by its Fair Trade Agreements, permitted its retailers to discount its products, while at the same time requiring them to advertise said products at the higher non-discount price.' For the purpose of determining the sufficiency of the bill on demurrer, the allegations therein and the several exhibits attached to and incorporated in the bill must be taken as true. Fred C. McClean Heating Supplies, Inc. v. Westfield Trade High Sch. Bldg. Committee of Westfield, 345 Mass. 267, 269, 186 N.E.2d 911.

The Fair Trade Law, first enacted in 1937, appears by its terms to have had two objectives. One was to eliminate any question about the validity of price fixing contracts between the producer, distributor or vendor of certain commodities bearing the trade mark, brand or name of the producer or owner, and the purchaser, who is usually a retailer. G.L. c. 93, § 14A. These contracts generally relate to the price at which the retailer is required to resell the commodity. The other objective was to permit the enforcement of such price fixing contracts not only against the immediate parties thereto but against any person '(w)ilfully and knowingly advertising offering for sale or selling any commodity at less than the price stipulated in any contract . . . (fixing such price) whether the person so advertising, offering for sale or selling is or is not a party to such contract' (emphasis supplied). G.L. c. 93, § 14B, as amended. This represented a radical departure from the common law which permitted the enforcement of such contracts against the parties thereto (Garst v. Harris, 177 Mass. 72, 58 N.E. 174, and Garst v. Charles, 187 Mass. 144, 72 N.E. 839), but not against persons who were not parties thereto. Garst v. Hall & Lyon Co., 179 Mass. 588, 590--591, 61 N.E. 219. Because the Fair Trade Law represents such a departure as to nonsigners, and because it creates an exception to the general public policy of protecting the consuming public by prohibiting monopolies and requiring free and open price competition in the sale of commodities which are neither harmful nor critical in supply, it will be strictly interpreted and narrowly circumscribed.

The Fair Trade Law appears to have evolved from a number of bills filed in the Legislature in 1937 for the purpose of taking advantage of the then recently enacted Miller-Tydings Act, amending § 1 of the Sherman Antitrust Act, 50 Stat. 693--694, 15 U.S.C. § 1 (1970). Some of the bills would have permitted contracts requiring that commodities would not be resold 'at less than the minimum price stipulated by the vendor.' 1937 Senate Doc. No. 122. 1937 House Doc. Nos. 548, 975. Others would have permitted contracts requiring that commodities be sold 'at the price stipulated by the vendor.' 1937 Senate Doc. No. 296. 1937 House Doc. Nos. 397, 549. Ultimately the Legislature enacted G.L. c. 93, §§ 14A--14D, and in so doing elected to validate and permit enforcement of contracts providing '(t)hat the buyer will not resell such commodity except at the price stipulated by the vendor' (emphasis supplied). (§ 14A (1)) We conclude from this that the Legislature intended to...