Corning Glass Works v. Max Dichter Co.

• Decision Date: 27 June 1960
• Citation: 161 A.2d 569,102 N.H. 505
• Court: New Hampshire Supreme Court
• Parties: CORNING GLASS WORKS v. MAX DICHTER COMPANY, Inc. and Man-Bur Sales, Inc.

Page 569

161 A.2d 569

102 N.H. 505

CORNING GLASS WORKS v. MAX DICHTER COMPANY, Inc. and Man-Bur Sales, Inc.

Supreme Court of New Hampshire.

Argued May 4, 1960.

Decided May 31, 1960.

Rehearing Denied June 27, 1960.

Devine, Millimet & McDonough, Shane Devine, Manchester, for plaintiff.

Booth, Wadleigh, Langdell, Starr & Peters, Ralph E. Langdell, Manchester, and Walter D. Ford, Wilmington, Del., for E. I. duPont de Nemours & Co. as amicus curiae.

McLane, Carleton, Graf, Greene & Brown, Arthur A. Greene, Jr., Manchester, for defendants.

BLANDIN, Justice.

I. The first issue before us is whether our Fair Trade Law (RSA ch. 357) violates the due process clause of our Constitution, Pt. I, Art. 15th.

The act provides in substance that no contract which relates to the sale or resale of a commodity bearing a trademark or the producer's name 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' because the contract contains provisions 'that the buyer will not resell such commodity at less than the minimum price stipulated by the vendor; that the producer or vendee * * * require upon the sale of such commodity to another' that the purchaser agree he will not resell it 'at less than the minimum price stipulated by such producer or vendee'. RSA 357:1.

Section 2 of the same law provides that anyone who 'wilfully and knowingly' sells or advertises such commodity at less than the stipulated price is engaged in unfair competition whether he is or is not a party to the contract, and 'any person' injured thereby may bring an action. It is further provided that 'any person' may maintain proceedings for an injunction to restrain violations of this law without alleging or proving actual damages. RSA 357:4.

Pt. I, Art. 15th of the Constitution, so far as pertinent, reads as follows: 'And no subject shall be * * * deprived of his property * * * but by the judgment of his peers, or the law of the land.' The phrase 'law of the land' is synonymous with due process of law. Opinion of the Justices, 66 N.H. 629, 633, 33 A. 1076.

In 1903, our Constitution was revised so that Pt. II, Art. 83 gave to the legislature the right to protect 'free and fair competition in the trades and industries' against monopolies 'or any other unfair means'. The avowed purpose of RSA ch. 357, originally enacted in 1937, is to protect 'trade-mark owners, distributors and the public against injurious and uneconomic practices in the distribution of articles of standard quality under a trade-mark, brand or name.' Laws 1937, c. 184. While the announced purpose is not conclusive, it is nevertheless entitled to weight. McIntire v. Borofsky, 95 N.H. 174, 178, 59 A.2d 471; Velishka v. City of Nashua, 99 N.H. 161, 165, 106 A.2d 571, 44 A.L.R.2d 1406.

The defendants, in their claim that the act is unconstitutional, are faced at the outset with the proposition that we should not declare it so except upon 'unescapable grounds'. Musgrove v. Parker, 84 N.H. 550, 551, 153 A. 320. Our court cannot compete with the Legislature in matters of opinion 'upon points of right, reason and expediency.' State v. Moore, 91 N.H. 16, 21, 13 A.2d 143, 147. Nor is the 'wisdom, effectiveness, and economic desirability' (emphasis supplied) of a measure for us to decide. McIntire v. Borofsky, supra, 95 N.H. 178, 59 A.2d 471, 472.

The police power, under which the plaintiff seeks to sustain the law, is broad. It includes such varied interests as public health, safety, morals, comfort, the protection of prosperity, and the general welfare. Dederick v. Smith, 88 N.H. 63, 67, 184 A. 595. If any fair reason can be given for including this legislation within the scope of these powers, the law must be upheld. Sundeen v. Rogers, 83 N.H. 253, 257, 141 A. 142, 57 A.L.R. 950. In other words, unless we can clearly see that this law purporting to have been enacted to protect 'free and fair competition * * * against all monopolies * * * or any other unfair means' bears 'no relation to those objects', we cannot declare it unconstitutional. Sundeen v. Rogers, supra, 83 N.H. 257, 141 A. 144.

In order to apply the tests laid down by these authorities to the case before us, it it necessary to discuss briefly certain relevant factors. Fair trade laws have been and are the subject of sharp differences of opinion among laymen, economists and courts. As was stated in Sunbeam Corporation v. Masters of Miami, 5 Cir., 1955, 225 F.2d 191, where the court applying Florida law held the act unconstitutional, 'We well realize that Fair Trade is a highly controversial subject among economists and businessmen as well as in the courts.' Id., 225 F.2d 197. Among opponents of the law we find such uncommon allies as The Wall Street Journal, certain labor unions, farmers' groups, chain store concerns, and economists. Some eighteen of the thirty-three states which have passed upon the act within the last decade have declared it unconstitutional.

Turning to the reverse side of the picture, we find favoring the measure small businessmen, retailers of various sorts, large producers and manufacturers such as represented here, the National Association of Retail Druggists, and some economists. Approximately fifteen courts of last resort have upheld the act, as has the United States Supreme Court in Old Dearborn Distributing Co. v. Seagram Corp., 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109. This case has not been overruled either expressly or, do we believe, by implication. Sunbeam Corporation v. Masters of Miami, supra, 225 F.2d at page 194; see also 21 U.Chi.L.Rev. 175, 207.

States which have upheld the law include Massachusetts (General Electric Co. v. Kimball Jewelers, Inc., 333 Mass. 665, 132 N.E.2d 652), New York (Bourjois Sales Corp. v. Dorfman, 273 N.Y. 167, 7 N.E.2d 30, 110 A.L.R. 1411), and New Jersey (Lionel Corp. v. Grayson & Robinson Stores, 15 N.J. 191, 104 A.2d 304).

Among the states holding the act unconstitutional are Arkansas (Union Carbide & Carbon Corp. v. White River Distributors, Inc., 224 Ark. 558, 275 S.W.2d 445), Florida (Liquor Store, Inc. v. Continental Distilling Corp., 40 So.2d 371), and Washington (Remington Arms Co. v. Skaggs, 1959, 345 P.2d 1085). In the latter case the court split five to four with a sharp dissent by the minority.

Typical articles by economists, whose number is legion, attacking fair trade may be found in 65 Yale L.J. 23, and 21 U.Chi.L.Rev. 175. On the other hand, a summary of the case for fair trade and answers to the objections to it appear in 64 Yale L.J. 967. Counsel appear to be in agreement that the United States Department of Commerce favors the act, while the Department of Justice opposes it. We think it would serve no useful purpose to enumerate further or attempt to analyze the myriad articles or decisions opposing or supporting free trade. If we grant, arguendo, that the balance of economic utility now seems to tip against such a law, we cannot say that it bears no relation to the objects of the police power. Nor can we hold that it is such an invasion of individual rights, while the public interest to be benefited is so slight, that we must declare the act of the Legislature 'indisputably unreasonable.' Shirley v. New Hampshire Water Pollution Commission, 100 N.H. 294, 300, 124 A.2d 189.

In short, we believe that a government of laws is best served when, in such situations as the present, a court exercises sufficient judicial restraint so that it does not substitute its economic or sociologicial predilections for the judgment of the Legislature. The defendants' contention that RSA ch. 357 violates Pt. I, Art. 15 of our Constitution cannot prevail.

II. The claim that the act constitutes an unlawful delegation of legislative powers so that it violates Pt. II, Art. 5, of the Constitution does not require extended consideration. The law is complete as to purpose and general policies. It requires no persons or agencies to make it effective. It removes the bar against contracts fixing a resale price and does so, in part at least, in recognition of the continuing property right of the producer in the good will of his business symbolized by his trademark. See 27 Fordham L.Rev. 68, 73. The producer can only take advantage of the law if his product is in free and open competition. Reasonable standards and policies having been prescribed, there is no invalid delegation of powers. Conway v. New Hampshire Water Resources Board, 89 N.H. 346...