General Elec. Co. v. A. Dandy Appliance Co.

Decision Date11 April 1958
Docket NumberNo. CC841,CC841
Citation103 S.E.2d 310,143 W.Va. 491
CourtWest Virginia Supreme Court
PartiesGENERAL ELECTRIC COMPANY, a Corporation, v. A. DANDY APPLIANCE COMPANY, Inc., a Corporation.

Syllabus by the Court

1. The Fair Trade Act, as contained in Chapter 123, Acts of the Legislature, 1937, Regular Session, which provides that the sale of trade-marked items at a price less than that stipulated is a violation of the Act whether the seller is a party to the stipulated price contract or not, is unconstitutional and void as an arbitrary and unreasonable exercise of the police power because of having no substantial relation to the public health, safety or general welfare.

2. Section 6 of Chapter 123 of the Acts of the Legislature, 1937, Regular Session, (Code 47-11-6) providing that any person 'Wilfully 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 act, 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', embraces a matter not stated in the title of said Act, nor germane to the matter stated in the title, and is therefore, unconstitutional and void, because violative of Section 30, Article VI of the Constitution of West Virginia, which provides that no legislative act 'shall embrace more than one object, and that shall be expressed in the title.'

Jackson, Kelly, Holt & O'Farrell, F. Paul Chambers, Charleston, for plaintiff.

Charles M. Walker, Charleston, for defendant.

DUCKER, Judge.

This is a case certified by the Circuit Court of Kanawha County on its own motion and in which Court the appellant, plaintiff below, filed its bill of complaint praying for an injunction to restrain the appellee, defendant below, from wilfully and knowingly selling electrical appliances bearing the plaintiff's trademark, at prices less or below the minimum retail sale prices fixed by the plaintiff under agreements with plaintiff's authorized dealers in West Virginia, the defendant not being such an authorized dealer or a signer of any such agreement, and the suit is one based upon alleged violation of the so-called 'Fair Trade Act' of West Virginia.

The plaintiff, in its bill of complaint, alleges: that it is a New York corporation authorized to do business in West Virginia; that it is engaged in the business of manufacturing electrical portable appliances and selling the same in West Virginia; that said appliances bear the plaintiff's trademark 'General (G.E.) Electric' and are in fair and open competition with appliances of the same general class made by others; that plaintiff has expended large sums of money, in excess of a million dollars, in promoting and advertising said appliances and has established a valuable reputation and good will for said appliances and for the trademark; that pursuant to the 'Fair Trade Act' of West Virginia, (Chapter 123, Acts of the Legislature, 1937, Regular Session; Chapter 47, Article 11 of the Code of West Virginia, as amended), plaintiff entered into agreements, all in the same form, under which plaintiff stipulated minimum retail resale prices for said appliances and that said contracts are now in full force and effect; that plaintiff duly notified defendant of the existence of its 'Fair Trade' agreements and of the minimum retail resale prices stipulated by plaintiff for such appliances; that defendant at various times after such notice wilfully and knowingly sold such appliances at prices lower than those stipulated by plaintiff and not under an exception provision of such contract; that by reason of such pricecutting and other violations of the Fair Trade Act on the part of defendant, plaintiff's trademark and good will are being jeopardized and the value thereof debased and plaintiff will suffer great loss and irreparable injury, and other retailers will not be able to sell said appliances at established retail prices and may refuse to handle said appliances; and that plaintiff has no adequate remedy at law. Exhibits to the bill contain the form of contract made with others than defendant, and price lists, as well as affidavits to support the facts alleged.

The defendant demurred to the plaintiff's bill on the following grounds: (1) that plaintiff has made no allegation that defendant entered into any agreement with plaintiff stipulating minimum retail resale prices for appliances manufactured by plaintiff; (2) that to make the 'Fair Trade Act' of West Virginia applicable to the defendant, who did not enter into any contract with plaintiff providing for minimum retail resale prices for appliances, is not a proper or legitimate exercise of the police power of the state, and is an invasion of the property rights of this defendant without due process of law; (3) that the West Virginia Fair Trade Act having been enacted in 1937 was void as of the date of its enactment because it was contrary to a Federal Statute known as the Sherman Anti-Trust Act, and is, therefore, still void and of no legal effect; and, (4) that Section 6 of the West Virginia Fair Trade Act is void as violative of Section 31, Article VI of the Constitution of the State of West Virginia, because Section 6 of the West Virginia Fair Trade Act brings an object into the Act which is not expressed in the title of the Act, therefore, said Section 6 of the Act is void as to a non-signer of a minimum retail resale price agreement such as this defendant.

Section 6 of Chapter 123, Acts of the Legislature, 1937, Regular Session, reads as follows:

'Wilfully 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 act, 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.'

We consider it unnecessary, in view of the recital of the issues, to quote the other sections of the statute.

The Circuit Court overruled the defendant's demurrer as to its first three grounds and sustained it on the fourth ground, holding that the Fair Trade Act is void because it violates Section 30, Article VI of the Constitution of West Virginia, in that the title to the act is not sufficient to express its purpose of bringing within its scope a non-signer of Fair Trade agreements; and the Court certified to this Court the following questions, which though substantially are the same as those specified in the demurrer, are exactly and expressly these:

(1) Is or is not the provision of the West Virginia 'Fair Trade Act' (Acts of the Legislature, 1937, Regular Session, Ch. 123; W.Va. Code, as amended, Ch. 47, Article 11, Sec. 6), which requires the defendant to maintain certain minimum retail resale prices for appliances, even though the defendant did not enter into any contract with the plaintiff, providing for such minimum retail resale prices, a proper exercise of the police power of the State of West Virginia?

(2) Is or is not the provision of the West Virginia 'Fair Trade Act', (Acts of 1937, Ch. 123; W.Va. Code, as amended, Ch. 47, Art. 11, Sec. 6), which requires the defendant to maintain certain minimum retail resale prices for appliances, even though the defendant did not enter into any contract with the plaintiff providing for such minimum retail resale prices, an invasion of the property rights of this defendant without due process of law?

(3) Is or is not the West Virginia 'Fair Trade Act', (Acts of 1937, Ch. 123, Code, as amended, Ch. 47, Art. 11, Sec. 6), void and of no legal effect because enacted in 1937, contrary to a Federal Statute known as the Sherman Anti-Trust Act?

(4) Does or does not Section 6 of the West Virginia 'Fair Trade Act', (Acts of 1937, Ch. 123; W.Va. Code, as amended, Ch. 47, Art. 11, Sec. 6), in so far as it relates to rights against non-signers, embrace an object not expressed in the title of said Act so as to be rendered void as violative of Section 30, Article VI of the Constitution of the State of West Virginia?

The first and second questions certified may well be considered together because it must first be determined whether the Fair Trade Act is a proper exercise of the police power of the sate, for if it is not, then it necessarily follows that it is not due process as to non-signers, but if the Act is within the police power of the state, the question of whether it violates the due process provision of the West Virginia Constitution may still require consideration and determination.

Although reat reliance is placed by the plaintiff upon the case of Old Dearborn Distributing Co. v. Seagram-Distillers Corp., 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, decided in 1936, and which involved a similar Fair Trade statute enacted in Illinois, and that case remains as authority for the validity of the West Virginia Act in so far as its validity under the due process clause of the Federal Constitution is concerned, such authority is not conclusive upon this Court in determining whether such an act is within the police power of this State or is violative of the due process of law provision of the West Virginia Constitution, even though the provisions of both Federal and State Constitutions, U.S.Const. Amend. 14; Const. art. 3, § 10, are practically identical in language. However, our conclusion that the Act in question is not a proper exercise of the police power of this state will eliminate any necessity for holding the Act valid because it may not violate the Federal Constitution. We are of the opinion that the determination of the extent and limitations of the police power of this state remains a prerogative of the sovereignty of this state and any question of...

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