Chicago Silk Co. v. Federal Trade Commission
| Decision Date | 27 July 1937 |
| Docket Number | No. 5948.,5948. |
| Citation | 90 F.2d 689 |
| Parties | CHICAGO SILK CO. v. FEDERAL TRADE COMMISSION. |
| Court | U.S. Court of Appeals — Seventh Circuit |
John A. Nash and Harry S. Harned, both of Chicago, Ill., for petitioner.
W. T. Kelley, Chief Counsel, Federal Trade Commission, Martin A. Morrison, Asst. Chief Counsel, and Reuben J. Martin and James W. Nichol, Sp. Attys., all of Washington, D. C., for respondent.
Before EVANS and MAJOR, Circuit Judges, and LINDLEY, District Judge.
This matter comes before the court upon the petition to review an order to cease and desist entered by the Federal Trade Commission under authority of section 5 of the Federal Trade Commission (15 U.S. C.A. § 45).
Petitioner is a corporation located in the city of Chicago, Ill., engaged in the sale and distribution of hosiery and lingerie throughout the United States. In the conduct of its business it distributes to the public through the United States mails certain literature, instructions, and sales outfits including paper punch cards, order blanks, and advertisements containing illustrations of hosiery and lingerie, together with samples of fabrics and circulars explaining its plan of selling said merchandise and the allowing of premiums or prizes to the operators of the punch board. In order to obtain the address of "prospects," a letter is sent to a woman offering her a pair of ladies' silk hosiery free on condition that she send petitioner the address of ten other women. Upon compliance with this requirement, the person is sent a pair of hosiery as promised, and each of the ten other "prospects" are sent the sales literature including a punch card with printed instructions for its operation. This card contains numbers from one to sixty and when pushed out of the card reveal the amount which is to be paid, ranging from 1 cent to 15 cents according to the number punched. Certain numbers are free and the operators who push these numbers are required to pay nothing, but have the same chance with the others in winning. $5.95 is the amount collected when all the numbers are sold. The person who sells the card receives two pair of ladies' silk hose free, and certain other persons who push out certain designated numbers likewise receive their hose free.
That the plan involves a game of chance or the sale of a chance to procure petitioner's merchandise is clearly shown, and that the operation of the plan is contrary to established public policy of the United States and the varied states and contrary to the criminal statutes of many of the states is conceded. Petitioner's sales were increased from $25,000 in 1932, the year it started in business to $150,000 in 1934, and even more in 1935. The commission found, among other things, that petitioner is engaged in offering for sale and selling its products in interstate commerce in competition with other persons likewise engaged; that the punch-card system of obtaining the business is a species of gambling which many of its competitors do not use for the reason that the method is unethical, unfair, and in violation of law; and that said method injuriously...
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