Bristol-Myers Co. v. L. Bamberger & Co.

• Decision Date: 16 December 1937
• Citation: 122 N.J.Eq. 559,195 A. 625
• Parties: BRISTOL-MYERS CO. v. L. BAMBERGER & CO.
• Court: New Jersey Court of Chancery

195 A. 625

122 N.J.Eq. 559

BRISTOL-MYERS CO.

v. L. BAMBERGER & CO.

Court of Chancery of New Jersey.

Dec. 16, 1937.

Syllabus by the Court.

1. The statute, P.L.1935, c. 58, p. 140, § 1, N.J.St.Annual 1935, § 217—13, directs that a resident merchant must not resell trade-marked or branded articles at less than the price fixed by the producer or owner of such trade-marked or branded commodities, and brands as "unfair competition" the sale of identified goods at less than the price fixed by the producer.

2. Allowance of 10 per cent. discount by the owner and operator of a department store to its employees on purchases by them of complainant's trade-marked or branded commodities for their personal use, for the use of persons entirely dependent upon them for support, or for use as gifts given and paid for in good faith, held, unfair competition within the intent and meaning of the statute.

Suit by the Bristol-Myers Company against L. Bamberger & Co. to restrain an alleged violation of the Fair Trade Act in selling complainant's trade-marked products to defendant's employees at 10 per cent. less than retail price.

Preliminary injunction issued.

Bilder, Bilder & Kaufman, of Newark, and Samuel Kaufman, of Newark, for complainant. Pitney, Hardin & Skinner, of Newark, for defendant.

STEIN, Vice Chancellor.

Bristol-Myers Company is a manufacturer of pharmaceutical products, extensively sold and distributed under distinctive trade-marks. It has expended large sums of money in advertising its products, established a valuable good will in connection with its business, and fixed minimum retail prices for its products pursuant to chapter 58, p. 140, P.L.1935 (N.J.St.Annual 1935, §§ 217—13 to 217—17), commonly known as the Fair Trade Act. There are presently approximately 1,800 retailers of complainant's products in New Jersey and contracts have been entered into by complainant with retailers fixing and establishing minimum retail selling prices for its products. Retailers in this state, including the defendant, observed these prices in the sale of complainant's trade-marked or branded articles to the public at large.

The defendant, L. Bamberger & Co., owns and operates a large department store in the city of Newark. It has established a policy of allowing its employees to make purchases from it, including the products of complainant, at a 10 per cent. discount from prices charged the public, and the same policy has been followed by the owners of other large department stores, not parties to this suit, with the result, it is charged, that approximately 5,000 of defendant's employees purchase complainant's goods for less than the minimum retail selling price established by the complainant pursuant to its contracts. This practice, it is charged, has and will in the future create dissatisfaction among wholesale and retail dealers in complainant's products who are unable to compete with these department stores for the patronage of department store employees unless they meet, if they can, this alleged unfair competition by establishing discounts of their own. Such action, it is complained, would lead to price wars and the entire breakdown of the resale price structure established at considerable cost by the complainant.

The matter is before the court upon the return of an order to show cause why a preliminary injunction should not issue enjoining the defendant from allowing such discounts upon the sale of complainant's products to its employees in violation of the statute.

The verified bill of complaint and the affidavits on behalf of the defendant present no dispute with relation to any fact material to a decision. The only issue therefore is one of law.

The plan established by the Fair Trade Act for the protection of the manufacturer's good will is the elimination of price competition among retailers. The method to be...