Goldsmith v. Mead Johnson & Co.

• Decision Date: 28 June 1939
• Docket Number: 27.
• Citation: 7 A.2d 176,176 Md. 682
• Parties: GOLDSMITH v. MEAD JOHNSON & CO.
• Court: Maryland Court of Appeals

7 A.2d 176

176 Md. 682

GOLDSMITH v. MEAD JOHNSON & CO.

No. 27.

Court of Appeals of Maryland

June 28, 1939

Appeal from Circuit Court of Baltimore City; Samuel K. Dennis Judge.

Suit by Mead Johnson & Company against Leon Goldsmith, trading as Goldsmith's Cut Rate Store, for an injunction against alleged unfair competition of defendant. From an order overruling defendant's demurrer to the bill, defendant appeals.

Order affirmed.

Morton M. Robinson, of Baltimore (Herman Samuelson and Jerome Robinson, both of Baltimore, on the brief), for appellant.

Herbert Levy, of Baltimore, for appellee.

Argued before OFFUTT, PARKE, SLOAN, MITCHELL, SHEHAN, JOHNSON, and DELAPLAINE, JJ.

DELAPLAINE Judge.

This appeal questions the constitutional validity of the Fair Trade Act of Maryland (Acts of 1937, ch. 239, as amended by Acts of 1939, ch. 248).

The act sanctions contracts establishing minimum retail prices on commodities, which bear trade-marks, brands or names of the producers or distributors, and which are in free and open competition with commodities of the same general class produced or distributed by others. 'Wilfully and knowingly advertising, offering for sale or selling any commodity' below the price stipulated in such a contract 'is unfair competition and is actionable at the suit of any person damaged thereby,' whether or not the person so advertising, offering for sale or selling is a party to the contract.

A bill of complaint was filed in the Circuit Court of Baltimore City by Mead Johnson & Company, an Indiana corporation, praying for an injunction against alleged unfair competition of Leon Goldsmith, a retailer. The bill alleges that the complainant manufactures articles of infant nutritional diet under its name, trade-marks, brands and labels; that it sells the products to wholesalers, who sell them to retail dealers; that the defendant is one of said dealers; that the complainant entered into a contract with approximately 179 dealers in Maryland to prevent 'the injurious and uneconomic practice of price-cutting'; but that the defendant failed to execute the contract. The bill further alleges that in June, 1938, the defendant was selling the products below the established prices; and that, although a warning was thereupon sent to him, he was continuing to sell wilfully and knowingly in violation of the statute.

After a temporary injunction was granted, the defendant demurred to the bill. The Court passed an order overruling the demurrer and from that order appeal was taken.

The Fair Trade Act has been enacted in forty-four States, including Maryland. In all the States in which its constitutionality has been tested, it has been held valid. Max Factor & Co. v. Kunsman, 5 Cal.2d 446, 55 P.2d 177; Pyroil Sales Co. v. Pep Boys, etc., 5 Cal.2d 784, 55 P.2d 194, 1186; Seagram-Distillers Corp. v. Old Dearborn Distributing Co., 363 Ill. 610, 2 N.E.2d 940; Joseph Triner Corp. v. McNeil, 363 Ill. 559, 2 N.E.2d 929, 104 A.L.R. 1435; Bourjois Sales Corp. v. Dorfman, 273 N.Y. 167, 7 N.E.2d 30, 110 A.L.R. 1411; Johnson & Johnson v. Weissbard, 121 N.J.Eq. 585, 191 A. 873; Weco Products Co. v. Reed Drug Co., 225 Wis. 474, 274 N.W. 426.

The validity of this legislation has also been sustained without dissent by the United States Supreme Court. The Illinois act, Smith-Hurd Stats. c. 121 1/2, § 188 et seq., was upheld in the cases of Old Dearborn Distributing Co. v. Seagram-Distillers Corp. (McNeil v. Joseph Triner Corp.), 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, 106 A.L.R. 1476; the California act Gen.Laws 1931, and Supp.1933, Act 8782, in Pep Boys, Manny, Moe & Jack v. Pyroil Sales Co. (Kunsman v. Max Factor & Co.), 299 U.S. 198, 57 S.Ct. 147, 81 L.Ed. 122.

Accordingly, in Pennsylvania the constitutionality of the Fair Trade Act, 73 P.S. § 7 et seq., is now accepted without question. Shryock v. Association of United Fraternal Buyers, Pa.Super., 5 A.2d 581.

Nevertheless, the appellant contends that the act is invalid on the ground that it violates the Declaration of Rights and Constitution of Maryland.

The appellant contends that the act conflicts with art. 23 of the Declaration of Rights, which provides that no man ought to be 'deprived of his life, liberty or property, but by the judgment of his peers, or by the Law of the Land.' But 'the Law of the Land,' as used in our Declaration of Rights, has the same significance as 'due process of law,' as used in the Fourteenth Amendment to the Constitution of the United States, U.S.C.A. Public Service Commission v. Northern Central R. Co., 122 Md. 355, 90 A. 105. In construing this article of the Declaration of Rights, the decisions of the Supreme Court on the Fourteenth Amendment are 'practically direct authorities.' Niles, Md. Constl. Law, 48. And in the Old Dearborn case [299 U.S. 183, 57 S.Ct. 143], Justice Sutherland said: 'In respect of the due process of law clause, it is contended that the statute is a price-fixing law, which has the effect of denying to the owner of property the right to determine for himself the price at which he will sell. * * * But the decisions referred to deal only with legislative price fixing. They constitute no authority for holding that prices in respect of 'identified' goods may not be fixed under legislative leave by contract between the parties. * * * We are here dealing not with a commodity alone, but with a commodity plus the brand or trade-mark which it bears as evidence of its origin and of the quality of the commodity for which the brand or trade-mark stands. * * * The ownership of the good will, we repeat, remains unchanged, notwithstanding the commodity has been parted with.'

The appellant also contends that the act is repugnant to art. 41 of the Declaration of Rights, which says: 'That monopolies are odious, contrary to the spirit of a free government and the principles of commerce, and ought not to be suffered.' In an opinion of the Supreme Court, Chief Justice Fuller cited Lord Coke's definition: 'A monopoly is an institution, or allowance by the King by his grant, commission, or otherwise to any person or persons, bodies politique, or corporate, of or for the sole buying, selling, making, working, or using of anything, whereby any person or persons, bodies politique, or corporate, are sought to be restrained of any freedome or liberty that they had before, or hindred in their lawfull trade.' United States v. E. C. Knight Co., 156 U.S. 1, 15 S.Ct. 249, 252, 39 L.Ed. 325. In recognizing this definition, our Court has said: 'To constitute a monopoly within the meaning of this definition, there must be an allowance or grant by the state to one or several of a sole right; that is, a right to the exclusion of all others than the grantee or grantees.' Wright v. State, 88 Md.

436, 41 A. 795, 798. So, it has been held that exclusive control constitutes monopoly in the economic sense. Raney v. County Com'rs of Montgomery County, 170 Md. 183, 183 A. 548. The Fair Trade Act does not abolish competition. This is made plain by Justice Sutherland 'Where a manufacturer puts out an article of general production identified by a special trade-mark or brand, the result of an agreement...