Harrington Mfg. Co., Inc. v. Powell Mfg. Co., Inc.

• Decision Date: 07 November 1978
• Docket Number: No. 776SC602,776SC602
• Citation: 38 N.C.App. 393,248 S.E.2d 739
• Parties: , 205 U.S.P.Q. 290 HARRINGTON MANUFACTURING COMPANY, INC. v. POWELL MANUFACTURING COMPANY, INC.
• Court: North Carolina Court of Appeals

Page 739

248 S.E.2d 739

38 N.C.App. 393, 205 U.S.P.Q. 290

HARRINGTON MANUFACTURING COMPANY, INC. v. POWELL MANUFACTURING COMPANY, INC.

No. 776SC602.

Court of Appeals of North Carolina.

Nov. 7, 1978.

Pritchett, Cooke & Burch by Stephen R. Burch and William W. Pritchett, Jr., Windsor, for plaintiff, Harrington Manufacturing Company, Inc., appellant-appellee.

Grier, Parker, Poe, Thompson, Bernstein, Gage & Preston by Gaston H. Gage and William P. Farthing, Jr., Charlotte, for defendant Powell Manufacturing Company, Inc., appellant-appellee.

PARKER, Judge.

PLAINTIFF'S APPEAL

On plaintiff Harrington's appeal, Harrington assigns error to the granting of Powell's motion dismissing Harrington's action by way of summary judgment. Defendant Powell contends the summary judgment was properly entered and cross-assigns as error the denial of its earlier motion to dismiss Harrington's complaint under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.

In substance, plaintiff Harrington alleged in its complaint that defendant Powell had advertised falsely that its tobacco combine was the only one which "primes lugs through tips" and that it owned the "exclusive CutterBar" for priming tips, that these statements were not true in that Harrington also manufactured a tobacco harvester which primed lugs through tips and also held a license to manufacture and sell the same device advertised by Powell as its "exclusive CutterBar," and that such false advertising by Powell constituted an unfair method of competition with Harrington and was a deceptive act declared unlawful by G.S. 75-1.1(a). Plaintiff Harrington further alleged that Powell's untrue advertisements had damaged plaintiff in the sum of $10,000,000.00, for which it prayed that it be awarded treble damages under G.S. 75-16.

We note initially that Chap. 747 of the 1977 Session Laws, which rewrote Subsections (a) and (b) of G.S. 75-1.1, is not applicable to the present case. This action was pending when the 1977 act was adopted, and Sec. 5 of that act expressly provides that it shall not apply to pending litigation. Therefore, as applicable to this case G.S. 75-1.1 is the form of that statute as it existed prior to the 1977 amendment, and the further references to that statute in this opinion will be to the statute as it was originally adopted in 1969 and as it read when this case was instituted. At that time, G.S. 75-1.1(a) and (b) read:

(a) Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

(b) The purpose of this section is to declare, and to provide civil means to maintain, ethical standards of dealings between persons engaged in business, and the consuming public within this State, to the end that good faith and fair dealings between buyers and sellers at all levels of commerce be had in this State.

At the outset, we consider and reject defendant Powell's contention, asserted as one of its grounds for sustaining the summary judgment and also as a grounds in support of its cross-assignment of error, that G.S. 75-1.1 does not apply to disputes between competitors but only to "dealings" between "buyers and sellers." From this, Powell argues that, there having been no "dealings" between it and Harrington as "buyers and sellers," G.S. 75-1.1 can have no application to this case. We do not so narrowly read the statute. G.S. 75-1.1(a) expressly proscribes "(u)nfair methods of competition," and competition necessarily requires that there be a competitor. G.S. 75-1.1(b) speaks in terms of declaring and providing civil means of maintaining ethical standards of dealings "between persons engaged in business," as well as between such persons and the consuming public. We hold, therefore, that G.S. 75-1.1 is applicable to the transactions alleged in plaintiff's complaint. The question presented by plaintiff's appeal thus becomes whether, when that statute and any applicable common law principles are properly applied to the material facts as to which no genuine issue has been shown, defendant was as a matter of law entitled to the summary judgment dismissing plaintiff's action. We hold that it was.

Affidavits, depositions, and answers to interrogatories show that there is no genuine issue as to the following facts:

Powell placed the following advertisement in the September and October 1974 issues of The Progressive Farmer and in the 5 September 1974 issue of Southeast Farm and Livestock Weekly:

IF YOU ALREADY OWN A POWELL TOBACCO COMBINE, SHOW THIS AD TO YOUR NEIGHBOR.

HE WANTS TO STAY IN BUSINESS TOO:

Like you, with labor high, hard to find and harder to keep, most tobacco growers have no choice. They Have to mechanize to stay in business.

Powell's exclusive, Proven system of Total Tobacco Mechanization is the answer. It's flexible . . . you start on any scale you want and add to it each year.

Consider the high-capacity Powell Tobacco Combine. Used with Powell Bulk Curing/Drying Systems, it can cut your Total harvest labor to just 4 people! (Driver, Transporter, 2 Rack & Barn Loaders.) This high capacity machine enables you to harvest one acre per hour with this small crew.

And Only the Powell Combine primes Lugs through tips. Our FlexBar header, plus exclusive CutterBar for priming tips, gets the job done.

Mechanize the Powell Way. Start now for '75-Advance planning is the key. Ask Powell to help. Mail the coupon today.

Powell also had the following advertisement broadcast on four dates in August 1974 from television stations in High Point, Raleigh, and Greenville, North Carolina, and from television stations in Florence, South Carolina, and Albany, Georgia:

"Total Mechanization

"With this year's tobacco crop season winding up, it's not a day too soon to begin planning next year's crop, and how you'll handle it.

"With labor high and hard to find, most growers have no choice. They must mechanize to stay in business.

"Usually you'd begin by installing one or more Powell bulk curing systems, like these Powell three-tier mobile units. This high-capacity, efficient system can cut both your curing labor and fuel costs in half.

"Then there's the proven, high-capacity Powell tobacco combine, that harvests an acre an hour usually with just one man the driver. It's the only combine on the market that primes lugs through the tips.

"Also the two or four row Powell Aerotopper, to top and spray your crop . . .

"And single and multi-row Powell transplanters, with once-over fertilizer units.

"That's Total Tobacco Mechanization . . . pioneered by Powell. Talk to your Powell dealer. Start planning now for seventy-five."

Powell has manufactured and sold its "CutterBar" since 1962. "CutterBar" is a descriptive term used exclusively by Powell to describe a mechanical tobacco harvesting device consisting of a blade assembly which operates on the principle of utilizing blades revolving with an upward cutting motion to cut leaves from the tobacco stalk. This blade assembly was invented by Dr. William Splinter of North Carolina State University, and it is sometimes referred to as the "Splinter knife type defoliator." The patent rights on this invention were assigned by North Carolina State University to Research Corporation of America, which in turn granted Powell a license to manufacture and sell machines covered by the patent. From March 1962 until 15 November 1974 Powell was the only firm licensed under the Splinter patent. On 15 November 1974 Research Corporation of America granted Harrington a license to manufacture under the patent. Both the license granted to Powell and the license granted to Harrington were non-exclusive.

Beginning in 1967 Harrington has also manufactured a fully automatic tobacco harvester which it has advertised and sold under the name "Roanoke Automatic Tobacco Harvester." Prior to the fall of 1974 this machine utilized a revolving rubberized spiral type defoliator to wipe the leaves from the stalk in a downward motion. This machine would prime lugs through tips. In August 1974 an employee of Harrington purchased a Powell "CutterBar" from Revelle Tractor Company. This unit, which had been manufactured by Powell, was brought to Harrington's plant in Lewiston, North Carolina, where it was incorporated into one of Harrington's automatic tobacco harvesters. Harrington added a hydrosynchronizer, a device which had been invented by Harrington's engineers, which synchronized by hydraulics the timing of the knife of the blade assembly with the forward motion of the harvester. On 28, 29, and 30 September 1974 Harrington broadcast a commercial over television stations in Greenville and Durham, North Carolina, and in Roanoke, Virginia. The video portion showed a blade assembly operating in a tobacco field and this was accompanied by the following audio announcement:

Mr. Tobacco Farmer:

Attend the Roanoke Automatic Tobacco Harvester Demonstration Monday, September 30; Tuesday, October first. See the Roanoke Automatic Tobacco Harvester using the Roanoke Hydro-Synchronized Blade Assembly. The Hydro-Synchronized Blade Assembly is a Dramatic Break-Through in harvesting tobacco. For information and direction, call Harrington Manufacturing Company, Lewiston, North Carolina.

As advertised in this commercial, Harrington demonstrated its automatic harvester, to which the Powell "CutterBar" had been attached, to some three hundred farmers who came from Eastern North Carolina, South Carolina, and Georgia. Harrington did not tell them it was a Powell "CutterBar" that they were looking at. Harrington took approximately fifteen orders for its Hydrosynchronized blade assembly for delivery before the 1975 tobacco season.

The list price for a fully equipped 1974 Powell tobacco combine was $16,398.60. The retail price of a 1974 standard Harrington Roanoke harvester was $16,500.00.

As above noted, the gravamen of plaintiff Harrington's complaint is that Powell violated...