General Elec. Co. v. Packard Bamberger & Co.

• Decision Date: 21 December 1953
• Docket Number: No. A,A
• Citation: 14 N.J. 209,102 A.2d 18
• Parties: GENERAL ELECTRIC CO. v. PACKARD BAMBERGER & CO., Inc. 39.
• Court: New Jersey Supreme Court

Page 209

14 N.J. 209

102 A.2d 18

GENERAL ELECTRIC CO. v. PACKARD BAMBERGER & CO., Inc.

No. A 39.

Supreme Court of New Jersey.

Argued Oct. 26 and Nov. 16, 1953.

Decided Dec. 21, 1953.

John W. Griggs, Hackensack, argued the cause for the appellant (Morrison, Lloyd & Griggs, Hackensack, attorneys).

Nicholas Conover English, Newark, argued the cause for the respondent (Godfrey K. Preiser, Jr., Newark, of counsel; McCarter, English & Studer, Newark, attorneys).

The opinion of the court was delivered by

BURLING, J.

This is an appeal from an injunction ordered by the Superior Court, Chancery Division, against a retailer under the New Jersey Fair Trade Act. The plaintiff, General Electric Company, a corporation of the State of New York, brought the action against the defendant, Packard Bamberger & Co., Inc., a New Jersey corporation, to restrain the latter from selling the plaintiff's products at prices less than prices fixed in resale price maintenance contracts effected between the plaintiff and retail dealers in New Jersey subsequent to July 14, 1952. A preliminary injunction was granted in favor of the plaintiff by order of the Superior Court, Chancery Division, on July 17, 1953. The defendant's appeal therefrom was addressed to the Superior Court, Appellate Division, but prior to hearing there certification was allowed on our own motion.

The pertinent facts in this case are not in dispute. The defendant admits, as alleged in the complaint, that it is a corporation of New Jersey engaged in the sale, at retail, of electrical appliances at Hackensack, New Jersey, and that the plaintiff, a New York corporation, manufactures electrical appliances and distributes them to retail dealers throughout the country, and throughout the State of New Jersey. The complaint charged that the plaintiff since July 14, 1952 had entered into 'Fair Trade Agreements,' I.e., resale price maintenance contracts, with retail dealers in New Jersey stipulating minimum resale prices for products of the plaintiff's manufacture, and on December 10, 1952 and February 20, 1953 had notified the defendant of the details thereof in writing. The defendant in its answer admitted that it had received the notifications referred to and admitted the contents thereof as stated in the exhibits attached to the complaint. In its brief on this appeal the defendant admits that its policy is to sell merchandise at minimum prices, that it had no contract with the plaintiff although it had notice that the plaintiff had price-fixing contracts with other retailers, and that it had sold the plaintiff's products at less than plaintiff's minimum prices. These admissions, for the purpose of this appeal, substantially summarize the facts set forth in the affidavits submitted to the trial court by both parties on the plaintiff's application for the order granting the interlocutory injunction, which is the order appealed in this cause.

As hereinbefore stated, the plaintiff instituted this action against the defendant in the Superior Court, Chancery Division, to obtain the remedy of injunctive relief to protect or enforce its resale price maintenance agreements, and the defendant appeals from the order granting interlocutory restraint in favor of the plaintiff.

The question involved on this appeal is whether a nonparticipating retailer may be compelled by an injunction issuing out of a state court to abide by resale price maintenance provisions established in contracts between the manufacturer having interstate business activity and other retailers or in other words whether a 'nonsigner' is protected from the enforcement of resale price maintenance agreements by the Congressional power to regulate interstate commerce under U.S.Const., Art. I, Sec. 8.

The plaintiff admitted on this appeal that the products with which the present controversy is concerned moved and presently move through interstate commerce. The facts in the case support this admission and consequently the necessity arises for consideration of the interstate commerce aspects of the appeal. Cf. Hoffmann-La Roche, Inc. v. Weissbard, 11 N.J. 541, 548--550, 95 A.2d 398 (1953).

The matters for decision here reduce themselves to one question of general public importance, namely: Is the nonsigner provision of the Fair Trade Act of New Jersey, R.S. 56:4--3 et seq., as amended by L.1938, c. 165, N.J.S.A., applicable to products moving into New Jersey through interstate commerce by virtue of the McGuire Act, P.L. 542, 82nd Congress, 2nd Session, c. 745 (July 14, 1952)? We are of the opinion that it is.

Resale price maintenance, in principle and practical application, has long been a subject of dispute, the intricacies of which are not presented for dissection on this appeal. A few precedents must be considered however, in order to reach the point of decision in this case.

It is settled in New Jersey that contracts for price maintenance between manufacturers, wholesalers and retailers constituted unlawful restraint of trade at common law. Hoffmann-La Roche, Inc., v. Weissbard, supra, 11 N.J., at page 547, 95 A.2d 398; Pazen v. Silver Rod Stores, Inc., 130 N.J.Eq. 407, 411--413, 22 A.2d 237 (E. & A. 1941). The same philosophy was expressed in Dr. Miles Med. Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (1911). The United States Supreme Court in the Dr. Miles case, supra, held that the manufacturer may not, in the absence of contract or statutory right, even though the restriction be known to purchasers, fix prices for future sales. Mr. Justice Hughes in the Dr. Miles case, supra, stated that the earlier doctrine of the common law with respect to contracts in restraint of trade 'has been substantially modified in adaptation to modern conditions,' 220 U.S. at page 406, 31 S.Ct. at page 384, 55 L.Ed., at page 518, and a restraint may be upheld if found reasonable both with respect to the public and to the parties. However, the principles of the common law have not been fully abolished and remain applicable under some circumstances. See Pazen v. Silver Rod Stores, Inc., supra.

The common-law rule was modified by statute in New Jersey by the enactment of L.1913, c. 210, p. 377 (effective April 1, 1913), which prohibited persons and firms dealing therein from 'depreciating the value' of trade-marked products 'in the public mind' and from discriminating against the same, Inter alia, 'by price inducement.' This 1913 statute was held to have set up 'a new standard of business morals' in derogation of the common law. See Ingersoll v. Goldstein, 84 N.J.Eq. 445, 93 A. 193, 194 (Ch.1915). The statute was amended by L.1915, c. 376, and by L.1916, c. 107; as so amended it was carried over into the Revised Statutes in 1937 as R.S. 56:4--1, 2, N.J.S.A. The former Court of Chancery upheld these acts as not imposing unreasonable restraints on interstate commerce in Ingersoll & Bro. v. Hahne & Co., 88 N.J.Eq. 222, 108 A. 128 (Ch.1917); Id., 89 N.J.Eq. 332, (Ch.1918). The rationale of these decisions was that the 1913 act and its amendments were enacted under the police power of the State to protect the use of a trade name or good will, and were not offensive to the Sherman Anti-Trust Act (July 2, 1890, c. 647, 26 Stat. 209, see 15 U.S.C.A., § 1 et seq.) and Clayton Act (October 15, 1914, c. 323, 38 Stat. 730, see 15 U.S.C.A., § 12 et seq.).

In 1935 New Jersey, as had many other states, enacted a 'Fair Trade Act.' This statute, in practical effect a supplement to the 1913 act, supra, although not so framed, was enacted as L.1935, c. 58. It was reenacted in the Revised Statutes, effective December 20, 1937, as R.S. 56:4--3 et seq., supra, and was amended by L.1938, c. 165 (in respects not here pertinent), and by L.1940, c. 230, N.J.S.A. (in relation to purchase of books by designated nonprofit agencies and organizations, provisions inapplicable to the question involved on this appeal).

There were appeals concerning the constitutionality (otherwise than as respecting interstate commerce) of the state fair trade acts such as the New Jersey statute, L.1935, c. 58, supra. See Johnson & Johnson v. Weissbard, 121 N.J.Eq. 585, 587, 191 A. 873 (E. & A.1937); Bourjois Sales Corporation v. Dorfman, 273 N.Y. 167, 7 N.E.2d 30, 110 A.L.R. 1411 (Ct.Apps.1937). These constitutional questions were resolved by the United States Supreme Court in Old Dearborn Distributing Co. v. Seagram-Distillers Corp., 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, 106 A.L.R. 1476 (1936), wherein it was held that the Fair Trade Act of Illinois (also enacted in 1935) constituted no denial of due process of law or equal protection of the law and was no unlawful delegation of power to private persons to control the disposition of property of others. The former Court of Errors and Appeals of New Jersey, in the Johnson & Johnson case, ubi supra, and the New York Court of Appeals, in the Bourjois case, supra, declared that the Old Dearborn case, supra, was dispositive and expressly controlling on these questions.

The next step in the development of the law relating to the enforcement of resale price maintenance agreements under the protection of state 'fair trade' laws was taken in the form of the passage on August 17, 1937 of the Miller-Tydings Act, amendatory of the Sherman Anti-Trust Act, supra, by the Congress of the United States. August 17, 1937, c. 690, Title VIII, 50 Stat. 673; see 15 U.S.C.A. § 1, supra. This amendatory federal legislation was held to be applicable only to the extent of immunization of voluntary contracts prescribing minimum prices from the prohibitory provision of the federal anti-trust legislation. Schwegmann Bros. v. Calvert Distillers Corporation, 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035, 19 A.L.R.2d 1119 (1951). We followed the Schwegmann Bros. case, supra, in Hoffmann-La Roche Inc., v. Weissbard, supra (11 N.J. 541 at page 547, 95 A.2d at page 401) wherein Mr. Justice Heher, speaking for this court,...