Bulova Watch Co., Inc. v. Brand Distributors of North Wilkesboro, Inc.

• Decision Date: 01 July 1974
• Docket Number: No. 67,67
• Citation: 206 S.E.2d 141,285 N.C. 467
• Court: North Carolina Supreme Court
• Parties: , 1974-2 Trade Cases P 75,150 BULOVA WATCH COMPANY, INC., a corporation, v. BRAND DISTRIBUTORS OF NORTH WILKESBORO, INC., a corporation, and Robert Yale. BULOVA WATCH COMPANY, INC., a corporation, v. MOTOR MARKET, INC., a corporation, d/b/a Bob's Jewelry & Loan, and RobertYale.

Page 141

206 S.E.2d 141

285 N.C. 467, 1974-2 Trade Cases P 75,150

BULOVA WATCH COMPANY, INC., a corporation, v. BRAND DISTRIBUTORS OF NORTH WILKESBORO, INC., a corporation, and Robert Yale.

BULOVA WATCH COMPANY, INC., a corporation, v. MOTOR MARKET, INC., a corporation, d/b/a Bob's Jewelry &

Loan, and RobertYale.

No. 67.

Supreme Court of North Carolina.

July 1, 1974.

McElwee & Hall by John E. Hall, and W. G. Mitchell, North Wilkesboro, for defendants appellants.

Grier, Parker, Poe, Thompson, Bernstein, Gage & Preston by Mark R. Bernstein and W. Samuel Woodard, Charlotte, for plaintiff appellee.

LAKE, Justice.

The pertinent portions of the North Carolina Fair Trade Act, enacted in 1937, are as follows:

'GS 66--52: Authorized contracts relating to sale or resale of commodities bearing trademark, brand or name.--No contract relating to the sale or resale of a commodity which bears, or the label or container of which bears, the trademark, 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 North Carolina by reason of any of the following provisions which may be contained in such contract:

'(1) That the Buyer will not resell such commodity at less than the minimim price Stipulated by the seller. (Emphasis added.)

'(2) 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. (Emphasis added.)

'(3) That the Seller will not sell such commodity: (Emphasis added.)

'a. 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

'b. 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.

'G.S. 66--55. Resales not precluded by contract.--No contract containing any of the provisions enumerated in § 66--52 shall be deemed to preclude the resale of any commodity covered thereby without reference to such contract in the following cases:

* * *

* * *

'(4) By any officer acting under an order of court. * * *

'GS 66--56. Violation of contract declared unfair competition.--Willfully 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 article, 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.' (Emphasis added.)

In Lilly & Co. v. Saunders, 216 N.C. 163, 4 S.E.2d 528, 125 A.L.R. 1308 (1939), this Court held the Fair Trade Act constitutional, Justice Barnhill, later Chief Justice dissenting. The judgments of the Court of Appeals and of the Superior Court in the present case are in accord with that decision. The defendants ask us to reconsider that decision and to determine anew the constitutionality of the Fair Trade Act, specifically the nonsigner provision contained in G.S. § 66--56, substantially for the reasons set forth in the dissenting opinion of Justice Barnhill. We allowed certiorari for that purpose.

The articles, bearing the plaintiff's trade name, sold and proposed to be sold by the defendants were and are lawfully acquired and owned by such defendant, having been purchased by such defendant 'at bankruptcy sales and from various parties other than the plaintiff.' Nothing in the record suggests that any defendant acquired any such article through the breach by its supplier of any contract between such supplier and the plaintiff. The prices charged for such products by each such defendant have been satisfactory to it and to its respective customers. Nothing in the record indicates that such selling defendant has failed to make a profit, deemed reasonable by it, upon any such sale, or proposes to do so.

The authority of this Court to declare an act of the Legislature unconstitutional arises from its duty to determine, in accordance with applicable and valid rules of law, the rights of litigants in a controversy brought before it by proper procedure. State v. Lueders, 214 N.C. 558, 200 S.E. 22. Consequently, when asked to determine the constitutionality of a statute, the Court will do so only to the extent necessary to determine that controversy. It will not undertake to pass upon the validity of the statute as it may be applied to factual situations materially different from that before it. Nicholson v. Education Assistance Authority, 275 N.C. 439, 447, 168 S.E.2d 401; Person v. Doughton, 186 N.C. 723, 120 S.E. 481; Commissioners v. State Treasurer, 174 N.C. 141, 149, 93 S.E. 482, 2 A.L.R. 726; 16 C.J.S. Constitutional Law § 94, p. 321. Consequently, we do not have before us upon this appeal, and we express no opinion as to the validity of, any contract authorized by G.S. § 66--52 as between the parties thereto. The question for decision upon this appeal is, Does the existence of such a contract between the plaintiff and a retailer entitle the plaintiff to enjoin one not a party thereto from selling an article, bearing the plaintiff's trade name, lawfully acquired by such person, at a price less than that specified by the plaintiff?

It is obvious that, nothing else appearing, a contract between A and B cannot deprive C of his preexisting liberty to contract with D. Here, the plaintiff contends something else appears, namely, G.S. § 66--56. The clear intent of the statute is so to restrict C's liberty of contract. Thus, we must determine its validity.

This Court attached great importance to the doctrine of Stare decisis. Observance of that doctrine is not only an expression of our respect for the opinions of our predecessors. It promotes stability in the law and uniformity in its application, which, in turn, enable people to predict with reasonable accuracy the consequences of their acts and business transactions. It gives protection to property rights acquired in reliance upon past decisions of this Court and marks the path which the trial courts may follow with some degree of assurance. Potter v. Water Co., 253 N.C. 112, 116 S.E.2d 374; Williams v. Hospital, 237 N.C. 387, 391, 75 S.E.2d 303; State v. Fulton, 149 N.C. 485, 63 S.E. 145; Hill v. Railroad, 143 N.C. 539, 573--575, 55 S.E. 854. Nevertheless, a decision of this Court, subsequently concluded to have been erroneous, may properly be overruled when such action will not disturb property rights previously vested in reliance upon the earlier decision. See, Rabon v. Hospital, 269 N.C. 1, 152 S.E.2d 485. As this Court, speaking through Justice Johnson, said in State v. Mobley, 240 N.C. 476, 487, 83 S.E.2d 100, 108, 'The doctrine of Stare decisis should never be applied to perpetuate palpable error.' In that respect the present case is much like State v. Ballance, 229 N.C. 764, 51 S.E.2d 731. In that case, as here, this Court reconsidered its earlier decision holding valid a statute regulating business activity. Speaking for the Court, Justice Ervin said:

'(T)he law must be characterized by stability if men are to resort to it for rules of conduct. These considerations have brought forth the salutary doctrine of Stare decisis which proclaims, in effect, that where a principle of law has become settled by a series of decisions, it is binding on the courts and should be followed in similar cases. (Citations omitted.)

'But the case at bar does not call the rule of Stare decisis in its true sense into play. Here, no series of decisions exists. (Citation omitted.) We are confronted by a single case which is much weakened as an authoritative precedent by a dissenting opinion 'of acknowledged power and force of reason.''

Here, the plaintiff asserts no property right acquired by it in reliance upon the decision of Lilly & Co. v. Saunders, supra. It has, in the intervening years, expended substantial sums in advertising its products for the purpose of making its trade name, 'Bulova,' synonymous, in the public mind, with high quality. It has entered into contracts throughout the State with retailers for the distribution of these products. There is nothing, however, in the record to indicate that the plaintiff has made any investment or substantial expenditure in this State which it would not have made had the opposite result been reached in Lilly & Co. v. Saunders, supra, or which it has not made, in comparable degree, in other states of the Union where no Fair Trade Act is in effect.

The defendants assert that the provision of G.S. § 66--56, extending the force and effect of a 'fair trade' contract to a seller not a party thereto, is invalid because it is an unlawful delegation of legislative power to a private corporation and also because it deprives the defendants of their liberty and property otherwise than by the law of the land, in violation of Article I, § 19, of the Constitution of North Carolina.

In Old Dearborn Distributing Co. v. Seagram-Distillers Corp., 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, the Supreme Court of the United States had before it the Illinois Fair Trade Act, which, in all respects material hereto, is identical with the North Carolina Act. The Court, in an opinion by Mr. Justice Sutherland, held that the provision of the Act, extending the force of the 'fair trade' contract to a non-signer thereof, was not 'so arbitrary, unfair or wanting in reason as to result in a denial of due process,' and that there...