Burche Co. v. General Electric Co.

• Decision Date: 27 June 1955
• Citation: 382 Pa. 370,115 A.2d 361
• Parties: BURCHE CO., a Pennsylvania Corporation, Appellant. v. GENERAL ELECTRIC COMPANY, a New York Corporation, Appellee, and Commonwealth of Pennsylvania, Appellee (Intervenor).
• Court: Pennsylvania Supreme Court

115 A.2d 361

382 Pa. 370

BURCHE CO., a Pennsylvania Corporation, Appellant. v. GENERAL ELECTRIC COMPANY, a New York Corporation, Appellee, and Commonwealth of Pennsylvania, Appellee (Intervenor).

Supreme Court of Pennsylvania.

June 27, 1955

Proceeding for a declaratory judgment determining whether the Pennsylvania Fair Trade Act is constitutional insofar as it requires petitioner, operating a retail department store, to sell respondent's commodities for not less than minimum retail prices established under such Act without having signed a fair trade contract with respondent. The Commonwealth intervened as a party defendant. From a judgment of the Court of Common Pleas, Dauphin County, as of September Term, 1952, No. 310, Homer L. Kreider, J., for defendants plaintiff appealed. The Supreme Court, No. 24 May Term, 1955 Arnold, J., held that the Act is constitutional as valid exercise of police power and not unlawful delegation of legislative power and that act of Congress, amending Federal Trade Commission Act by removing nonsigner provisions of state fair trade acts from prohibition of Sherman Anti-Trust Act, left Pennsylvania Fair Trade Act in force as to sales by non-signers in interstate commerce, as well as intrastate commerce, without necessity for re-enactment of such act.

Judgment affirmed.

Samuel A. Schreckengaust, Jr., and Francis B. Haas Jr., McNees, Wallace & Nurick, Harrisburg, for appellant.

Ernest S. Burch, John McI. Smith, James H. Stewart, Jr., Nauman, Smith, Shissler & Hall, Harrisburg, for appellee General Electric Co.

Harry F. Stambaugh, Sp. Counsel, Harrisburg, Herbert B. Cohen, Atty. Gen., for the Commonwealth.

Before STERN, C. J., and STEARNE, JONES, BELL, CHIDSEY, MUSMANNO and ARNOLD, JJ.

ARNOLD, Justice.

This case arose on a declaratory judgment under a case stated. The Commonwealth of Pennsylvania was given leave to intervene as a party defendant. The court below pronounced judgment in favor of the defendant and the plaintiff appeals.

Burche Co. operates a retail department store in the city of Harrisburg. The General Electric Company, a foreign corporation duly authorized to transact business in Pennsylvania, manufactures a large variety of electric fixtures and appliances under the brand and trade name of ‘ General (GE) Electirc.’ These commodities are widely advertised and are in open competition in Pennsylvania with those of the same general class manufactured by others. The General Electric Company has expended large sums of money in promoting and advertising these commodities both in Pennsylvania and throughout the United States. It expended for such advertising during the three year period from 1949 to 1951 an amount in excess of $6,000,000, thereby developing a valuable reputation and good will for such commodities and for the trade-mark under which they are produced sold. General Electric engages in price regulations of its commodities by means of a minimum retail price agreement commonly known as ‘ fair trade contracts,’ and it has entered into such agreements with other retailers doing business in Pennsylvania.

The plaintiff has been notified by the defendant of the existence of fair trade agreements with other retailers, and also of the stipulated minimum retail prices for the commodities established under these agreements. It has not entered into a fair trade agreement with the defendant, but admits it has wilfully, intentionally and knowingly advertised, offered for sale and sold these commodities at prices below the stipulated retail minimum.

The Act of 1935, P.L. 266, as amended by the Act of 1941, P.L. 128, 73 P.S. § 7, provides, inter alia:

‘ No contract relating to the sale or resale of a commodity which bears, or the label or content of which bears, or the vending equipment from which said commodity is sold to the consumer bears the trade-mark, brand or the name of the producer or owner of such commodity, and which is in fair and open competition with commodities of the same general class produced by others, shall be deemed in violation of any law of the State of Pennsylvania by reason of any of the following provisions which may be contained in such contract:

‘ (a) That the buyer will not resell such commodity, except at the price stipulated by the vendor.

‘ (b) That the buyer of such commodity require upon his resale of such commodity that the purchaser from him agree that such purchaser will not in turn resell except at the price stipulated by the vendor of the buyer.’

The plaintiff contends that this Act as applied to it is unconstitutional because it had not signed a minimum retail price maintenance agreement with the defendant. It must be conceded that generally such acts are held constitutional. See Bristol-Meyers Co. v. Lit Brothers, Inc., 336 Pa. 81, 6 A.2d 843; Lentheric, Inc., v. F. W. Woolworth Co., 338 Pa. 523, 13 A.2d 12; ^[1] Old Dearborn Distributing Co. v. Seagram-Distillers Corporation, 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, cited in Bristol-Meyers Co. v. Lit Brothers, Inc., 336 Pa. 81, 6 A.2d 843.^[2] The Act is a valid exercise of the police power: Bristol-Meyers Co. v. Lit Brothers, Inc., supra; Old Dearborn Distributing Co. v. Seagram-Distillers Corporation, supra. On the general subject see the case of Nebbia v. People of State of New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940, and Rohrer v. Milk Control Board, 322 Pa. 257, 186 A. 336.

Nor is this Act an unlawful delegation of legislative power. In fact, it is not a delegation of power at all. Old Dearborn Distributing Co. v. Seagram-Distillers Corporation, 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, in which that Court held constitutional the Illinois Fair Trade Act, S.H.A. ch. 121 1/2, § 188 et seq., which required nonsigners to observe the price restriction. See also Joseph Triner Corporation v. McNeil, 363 Ill. 559, 2 N.E.2d 929, 104 A.L.R. 1435, and Johnson & Johnson v. Weissbard, 121 N.J.Eq. 585, 191 A. 873; Ely Lilly & Co. v. Saunders, 216 N.C. 163, 4 S.E.2d 528 125 A.L.R. 1308; Weco Products Co. v. Reed Drug Co., 225 Wis. 474, 274 N.W. 426; General Electric Co. v. Masters, Inc., 307 N.Y. 229, 120 N.E.2d 802.

At the time of the passage of this Act in 1935, and its amendment in 1941, it was unconstitutional as applied to interstate commerce, being in conflict with the Sherman Anti-Trust Act 15U.S.C.A. § § 1-7, 15 note. Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035. In 1952 Congree enacted the so-called McGuire amendment to the Federal Trade Commission Act, 15 U.S.C.A. § 45 and note, which reversed the doctrine declared in the Schwegmann case and removed from the prohibition of the Sherman Anti-Trust Act the nonsigner provisions of state fair trade acts. The Pennsylvania statute was clearly in force as to intrastate commerce since the Sherman Act applies only to interstate commerce. The passage of the McGuire Act left the Pennsylvania Act in force as to sales by nonsigners in interstate commerce. In General Electric Co. v. Packard Bamberger & Co., Inc., 14 N.J. 209, 102 A.2d 18, 23, the Supreme Court of New Jersey held that after the enactment of the McGuire Act it was not necessary to reenact the Fair Trade Law of that state. In its opinion written by Mr. Justice Burling the Court said: ‘ The foregoing authorities do not reach the present question, namely, whether a state statute in order to have effect must be reenacted after the relaxation of the federal restriction against its operation with respect to interstate commerce. Under the circumstances of the state and federal legislation involved herein we are of the opinion that reenactment of the state statute is not necessary. There is respectable authority for this determination. It is stated that ‘ Where a state statute is declared unconstitutional or invalid because it...