General Elec. Co. v. Wahle

• Decision Date: 18 April 1956
• Parties: GENERAL ELECTRIC COMPANY, Appellant, v. Rolla H. WAHLE, doing business as R. H. Wahle Co., Respondent.
• Court: Oregon Supreme Court

Page 635

296 P.2d 635

207 Or. 302

GENERAL ELECTRIC COMPANY, Appellant, v. Rolla H. WAHLE, doing business as R. H. Wahle Co., Respondent.

Supreme Court of Oregon, En Banc.

Argued Feb. 23, 1956.

Decided April 18, 1956.

Clarence J. Young, Portland, argued the cause for appellant. On the briefs were Koerner, Young, McColloch & Dezendorf and John P. Bledsoe, Portland.

Eric R. Haessler, Portland, argued the cause for respondent. On the brief were Keane & Haessler, Portland.

TOOZE, Justice.

This is a suit for an injunction and for damages, brought by General Electric Company, a corporation, as plaintiff, against Rolla H. Wahle, dba R. H. Wahle Co., as defendant. Defendant's general demurrer to plaintiff's amended complaint was sustained. Plaintiff refused to plead further, and a decree was entered dismissing the suit. Plaintiff appeals.

Plaintiff is a New York corporation authorized to transact business in Oregon. It is engaged in the manufacture and sale of electric appliances, clocks, automatic blankets, fans, vacuum cleaners, heating pads, and other electrically operated devices. All said products bear plaintiff's trademark 'General (GE) Electric,' and are sold in this state in free and open competition with appliances of the same general class produced by others. Plaintiff carries on a nation-wide program of advertising respecting its trademarked products through the medium of newspapers, dealer and distributor cooperative advertising, magazines of national circulation, radio and television, and has established a valuable reputation and good will for the said appliances and for the trade-mark under which they are produced and sold.

Defendant, as alleged in plaintiff's complaint and as admitted by the demurrer, is engaged in the sale at retail of electrical appliances at 131 N. W. Fourth avenue in the city of Portland, Multnomah county, Oregon.

Acting pursuant to the Fair Trade Act of this state, ORS 646.310 to 646.370, plaintiff has entered into agreements with more than 200 retail dealers in the state of Oregon, all in the same form, under which plaintiff stipulated the minimum retail resale prices at which said products should be sold. The defendant was not a party to any of such contracts, but he had express notice of their existence and of the minimum prices thereby established.

On or about November 25, 1953, and thereafter, the defendant, with knowledge of said contracts and the minimum prices thereby fixed, willfully advertised, offered for sale and sold at retail, one or more of said appliances manufactured and sold by plaintiff and bearing its trademark at prices which were lower than those stipulated by plaintiff in said agreements. The sales made by defendant were in the ordinary course of business as a retailer and did not come within any of the exceptions provided for in the Fair Trade Act.

All the facts heretofore stated are to be found alleged in plaintiff's complaint, and for the purposes of the general demurrer are admitted to be true. In support of his demurrer, defendant contended:

1. That the written contract entered into between plaintiff and some retailers was not the type of contract contemplated by the Fair Trade Act, lacked consideration, and was unenforceable;

2. That the Fair Trade Act constituted an unconstitutional delegation of legislative power to a private person to fix prices in violation of the provisions of the Oregon Constitution; and

3. That the operation of the Fair Trade Act as to nonsigners of a contract to fix minimum prices for retailers amounts to a denial of due process under the state constitution.

The trial judge (the distinguished, capable, and much-beloved Lowell Mundorff, since deceased), in a memorandum opinion, when denying plaintiff's motion for a preliminary injunction upon the ground that the Fair Trade Act was unconstitutional as it applied to nonsigners, erroneously held that the contract involved here was not a contract coming within the terms of the Act and was 'nudum pactum and invalid and unenforceable for want of consideration.' The constitutionality of the Fair Trade Act as it applies to nonsigners of the so-called Fair Trade agreements is squarely presented in this litigation, and we will consider the matter from that standpoint.

By virtue of the provisions of the Miller-Tydings Act, 50 Stat. 693, 15 U.S.C.A. § 1, and the later McGuire Act, 66 Stat. 632, 15 U.S.C.A. § 45, no question can be raised as to the constitutionality of Oregon's Fair Trade Act as it applies to the actual parties to a contract entered into pursuant to its terms.

Oregon's Fair Trade Act is in language substantially the same as that appearing in the Fair Trade Acts of some 44 other states of the Union. Our statute uses the phrase 'free and upon competition', whereas, some other state statutes read 'fair and open competition,' but insofar as our decision in this case is concerned we deem that difference wholly immaterial.

The provisions of the Oregon Fair Trade Act material to our discussion are the following:

'A contract relating to the sale or resale of a commodity which bears, or the label or container of which bears or the vending equipment through which the commodity is sold bears, the trade-mark, brand or name of the producer or distributor of the commodity and which commodity is in free and open competition with commodities of the same general class produced or distributed by others is not in violation of any law of Oregon by reason of any of the following provisions which may be contained in the contract:

'(1) That the buyer will not resell the commodity at less than the minimum price stipulated by the seller.

'(2) That the buyer will require of any dealer to whom he may resell the commodity an agreement that he will not, in turn, resell at less than the minimum price stipulated by the seller.

'(3) That the seller will not sell the commodity:

'(a) To any wholesaler, unless the wholesaler will agree not to resell the commodity to any retailer unless the retailer will in turn agree not to resell the commodity except to consumers for use and at not less than the stipulated minimum price, and unless the wholesaler will likewise agree not to resell the commodity to any other wholesaler unless the other wholesaler will make the same agreement with any wholesaler or retailer to whom he may resell; or

'(b) To any retailer, unless the retailer will agree not to resell the commodity except to consumers for use and at not less than the stipulated minimum price.' ORS 646.340

'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 ORS 646.330 to 646.360, whether the person so advertising, offering for sale or selling is or is not a party to the contract, is unfair competition and is actionable at the suit of any person damaged thereby.' (Italics ours.) ORS 646.370

Article 1, § 21, Oregon Constitution, provides in part:

'No ex-post facto law, or law impairing the obligations of contracts, shall ever be passed, nor shall any law be passed, the taking effect of which shall be made to depend upon any authority, except as provided in this Constitution; * * *.' (Italics ours.)

Article 1, § 20, Oregon Constitution, provides:

'No law shall be passed granting to any citizen or class of citizens privileges, or immunities, which, upon the same terms, shall not equally belong to all citizens.'

At the outset we take note of the following contention made by plaintiff on this appeal. It states in its brief:

'The Supreme Court of this state has twice held that the Fair Trade Act of Oregon is constitutional; such holdings are binding upon the trial court.'

The first case cited by plaintiff in support of the foregoing proposition is: Borden Co. v. Schreder, 182 Or. 34, 37, 185 P.2d 581, 582. That case was decided in 1947.

In that case we said:

'In the Circuit Court defendant challenged the constitutionality of the Fair Trade Act on various grounds, but on appeal has abandoned such contentions. Ever since the decision of the Supreme Court of the United States in Old Dearborn Distributing Co. v. Seagram-Distillers Corp., decided in 1936, 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, 106 A.L.R. 1476, sustaining the constitutionality of the Fair Trade Act of Illinois, Smith-Hurd Stats.Ill. c. 121 1/2, § 188 et seq., the validity of such legislation has not been considered an open question.' (Italics ours.)

From the foregoing statement, upon which plaintiff relies, it is manifest that the constitutionality of the Fair Trade Act was not before this court for decision in the Schreder case. The statement that since the decision in the Old Dearborn case, 'the validity of such legislation has not been considered an open question', could hardly be deemed a holding that the Fair Trade Act met the demands of the Oregon Constitution as respects nonsigners to Fair Trade contracts. The Old Dearborn decision dealt with constitutional questions arising under the federal constitution. Only the courts of this state have the jurisdiction or power to interpret and apply the provisions of the Oregon Constitution as to state statutes.

It is elementary that the decisions of the Supreme Court of the United States interpreting and applying the provisions of the federal constitution are, until overruled by that court, final and binding upon all courts, state and federal. Constitutional questions so determined cease to be open questions, particularly insofar as state and lower federal courts are concerned. That is all we said in the Schreder case. Even to say that was unnecessary to our decision. It is manifest from what is first quoted above that the statement respecting the constitutionality of the Act was pure dictum.

The second case cited by plaintiff in support of its claim is Federal Cartridge Corp. v. Helstrom, 202 Or. 557, 276 P.2d 720, 722, decided in 1954. In that case ...