General Elec. Co. v. Kimball Jewelers

• Decision Date: 07 March 1956
• Citation: 132 N.E.2d 652,333 Mass. 665
• Parties: GENERAL ELECTRIC COMPANY v. KIMBALL JEWELERS, Inc.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 652

132 N.E.2d 652

333 Mass. 665

GENERAL ELECTRIC COMPANY v. KIMBALL JEWELERS, Inc.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Jan. 4, 1956.

Decided March 7, 1956.

Warren F. Farr, Boston (George C. Caner, Jr., Boston, with him), for plaintiff.

John D. O'Reilly, Jr., and Maurice Caro, Boston, for defendant.

Joseph P. Healey, Boston, amicus curiae.

Before QUA, C. J., and RONAN, SPALDING, WILLIAMS, and COUNIHAN, JJ.

RONAN, Justice.

This is a suit brought by the plaintiff under the Fair Trade Law, so called, G.L. (Ter.Ed.) c. 93, §§ 14A-14D, inserted by St.1937, c. 398, as most recently amended by St.1943, c. 40, to enjoin the defendant from selling at retail the plaintiff's trade marked appliances at prices lower than the minimum retail prices stipulated in fair trade contracts in effect between the plaintiff and a large number of retail dealers in this Commonwealth. The suit was presented on a stipulation in the Superior Court, and the judge without making any decision reported it to this court.

The plaintiff, General Electric Company, hereinafter called 'GE,' manufactures and sells many products including small electric appliances such as housewares, clocks, automatic blankets, fans, and heating pads, all of which bear its trade mark 'General (GE) Electric.' These small appliances are sold in fair and open competition with commodities of the same general class produced by others. The plaintiff has expended large sums in promoting and advertising these products and has established a valuable reputation and good will for them and its trade mark. The plaintiff in order to protect its good will and its trade mark has entered into approximately two hundred fifty written contracts with retail dealers in this Commonwealth under which it has stipulated the minimum retail resale prices for its appliances.

The defendant (hereinafter referred to as Kimball) conducts 'a discount house,' so called, where customers can obtain nationally advertised merchandise at a discount. Kimball has no fair trade agreement with the plaintiff, but since March, 1953, Kimball has known that the plaintiff has entered into contracts with other retailers and the minimum prices stipulated in their contracts with GE. Kimball nevertheless has sold and intends to continue to sell the small appliances produced and trade marked by the plaintiff below the minimum prices stipulated in these dealers' contracts and currently in effect.

The defendant first challenges the fair trade contracts made between GE and the other retailers. These contracts are the means by which GE establishes a fair trade price and if they are invalid the suit must be dismissed. The defendant next contends that GE having waived damages is barred by certain conduct such as abandonment, acquiescence, and other similar conduct, from obtaining injunctive relief. The defendant finally contends that our Fair Trade Law and the McGuire Act passed by Congress to aid the enforcement of the State fair trade laws are both for various reasons null and void.

I.

We first consider the validity of the contracts which GE has with the retail dealers in this Commonwealth. They are the fundamental basis of this suit. This is not a suit to enforce one of these contracts against Kimball because the latter never signed any contract. So far as Kimball is concerned these contracts are the price fixing devices employed by GE in fixing fair trade prices, and such prices become binding against a retailer who wilfully and knowingly sells at a price less than that fixed in these contracts as provided for by § 14B of c. 93, our Fair Trade Law.

The plaintiff since September, 1952, which was about two months after the enactment of the McGuire Act, U.S.C. (1952 ed.) Title 15, § 45(a) [15 U.S.C.A. § 45(a)], and up to the time of the hearing in the Superior Court had made about two hundred fifty contracts with retail dealers in this Commonwealth. It does such a large business in these small electrical appliances that it has established a division separate from and independent of its various other branches. It contends that these contracts comply with our fair trade statute, G.L. (Ter.Ed.) c. 93, §§ 14A-14D, inserted by St.1937, c. 398, as amended by St.1943, c. 40. Section 14A in so far as material provides that no contract relating to the sale or resale of a commodity which bears, or the container of which bears, the trade mark, brand or name of the producer or owner and which commodity 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 Commonwealth by reason of any of the following provisions which may be contained in such contract: '(1) That the buyer will not resell such commodity except at the price stipulated by the vendor. (2) That the producer or vendee of a commodity require upon the sale of such commodity to another, that such purchaser agree that he will not, in turn, resell except at the price stipulated by such producer or vendee.' The dealer need not comply with the contract under certain conditions as in closing out his stock in trade, for the purpose of discontinuing delivery, or when the goods are damaged or deteriorated in quality, or where sales are made by an officer acting under a court order. Section 14B prohibits one from wilfully and knowingly selling below the fair trade price even if he is not a party to one of these fair trade contracts.

The contracts with the retail dealers were not lacking in consideration. The Fair Trade Law permits producers of trade marked commodities to protect their trade marks and good will from damage resulting from cut rate competition by fixing the prices at which their merchandise may be resold by the dealers. The law does not define the form or contents of these contracts. It simply provides that the contract shall not be declared to be unlawful if it contains two clauses which we have already mentioned. The statute does not require the producer to assume any particular obligation to the dealer. Both parties as stated in the written contracts were motivated by a desire 'to avail themselves of the fair trade acts and the acts of Congress.' The dealer acknowledged receipt of the list of fair trade prices on GE products and agreed not to sell the products at less than those listed prices.

The contract fixes no definite period for its duration other than that it shall continue in effect from its date until terminated by either party upon ten days' written notice to the other. General Electric at least promises that while the contract is in force, the is, until ten days after written notice, it will not withdraw any of its products from its fair trade list or change the listed price without giving prompt notice to the dealer in writing by personal delivery or by mail. This is an obligation which General Electric assumed by virtue of its contract, however slight the obligation may be regarded by those not engaged in the trade. It was important for the dealer to be kept informed of any changes in the fair trade prices of the General Electric Products. Indeed, the plan could not operate until General Electric undertook to keep the dealers informed of the current prices. A discount dealer no longer in securing General Electric products will be likely to encounter the difficulties previously experienced by a non-signer dealer. The contract gives the dealer the benefit of the price support afforded by General Electric's price lists--not only the one attached to the contract but any subsequent ones while the contract is in effect. The furnishing of a current price list is the mainspring that continues the operation of the scheme. See Doyle v. Dixon, 97 Mass. 208, 213; Wit v. Commercial Hotel Co., 253 Mass. 564, 572-573, 149 N.E. 609. It was held in Chandler, Gardner & Williams, Inc., v. Reynolds, 250 Mass. 309, 145 J.E. 476, which was a suit in equity to enforce the restrictive provisions of a contract of employment where the employer reserved to itself the exclusive privilege of discharging the employee, that the contract of employment did not lack consideration. It has been settled that contracts similar to the one introduced in evidence in this case are supported by sufficient consideration. Houbigant Sales Corp. v. Woods Cut Rate Store, 123 N.J.Eq. 40, 43-44, 47-48, 196 A. 683; General Electric Co. v. Masters, Inc., 307 N.Y. 229, 120 N.E.2d 802, appeal dismissed sub nomine Masters, Inc., v. General Electric Co., 348 U.S. 892, 75 S.Ct. 215, 99 L.Ed. 701; General Electric Co. v. S. Klein-on-the-Square, Inc., Sup., 121 N.Y.S.2d 37. Seagram Distillers Co. v. Corenswet, Tenn., 281 S.W.2d 657, 661. Williston, Contracts (Rev. ed.) s. 102. The execution of the contract by the dealer might well have been thought to be a benefit to him, otherwise he would not have signed it. He might well have thought that the making of the contract would tend to free him from cut rate competition, or lessen the competition, in one branch of his business and that the more signers the plaintiff secured in the trade area served by the dealer the better it would be for the dealer. The dealer executed the contract freely and voluntarily and secured for his own benefit the establishment of a fair trade program.

The fact that the plaintiff could immediately add to, diminish or withdraw the items contained in the price list of articles it furnished while the dealer could terminate the contract upon ten days' notice would not render the contract invalid if valid in other respects. Preston v. American Linen Co., 119 Mass. 400, 404; Eliopoulos v. Makros, 322 Mass. 485, 488, 77 N.E.2d 777.

The Fair Trade Law, § 14A, provides that a contract shall not be deemed illegal if it contains these clauses, to wit: '(1) That the buyer will not resell such commodity except at the price stipulated by the vendor. (2) That the producer or vendee of a commodity require upon the sale...