Home Utilities Co. v. Revere Copper & Brass, Inc.

• Decision Date: 11 April 1956
• Docket Number: No. 147,147
• Parties: HOME UTILITIES COMPANY, Incorporated, v. REVERE COPPER and BRASS, Inc., et al.
• Court: Maryland Court of Appeals

Page 610

209 Md. 610

122 A.2d 109

HOME UTILITIES COMPANY, Incorporated, v. REVERE COPPER and BRASS, Inc., et al.

No. 147.

Court of Appeals of Maryland.

April 11, 1956.

Paul F. Due, Baltimore (Harry Silbert and Melvin J. Sykes, Baltimore, on the brief), for appellant.

William L. Marbury, Baltimore (John W. Avirett, 2nd and Piper & Marbury, Baltimore, on the brief), for appellees.

Before BRUNE, C. J., and DELAPLAINE, COLLINS, HENDERSON and HAMMOND, JJ.

HENDERSON, Judge.

By bill for declaratory judgment, the appellant launched another attack upon the 'Fair Trade' Act, Code 1951, Art. 83, secs. 102-110, and particularly upon the so-called 'non-signer' provisions. The undisputed facts show that the appellant wilfully and knowingly advertised and offered for sale appellee's trade marked products at less than the price stipulated in contracts entered into by the appellee with others. Sec. 107 of the Article provides that under such circumstances the person so advertising, offering for sale or selling, whether or not a party to such a contract, is guilty of unfair competition and is subject to an action at the suit of any person damaged thereby. After a hearing at which the facts were stipulated, the Chancellor dismissed the bill and granted the appellee's counterclaim for an injunction. It seems unnecessary to state the facts in detail. It is sufficient to note that the complainant sells merchandise, including 'Revere Ware', both within and without the State, does not engage in sales below cost, but attempts to produce a gross profit of twenty per cent on all items sold. Although the complainant has not signed any Fair Trade contract in regard to 'Revere Ware', it has purchased it from distributors with knowledge of such agreements, and has sold these trade marked products at prices below those specified in the agreements, and has continued to do so after notice to desist.

The appellant contends that the non-signer provision is invalid as applied to its business under present market conditions, on three grounds: (1) that it deprives the appellant of its property contrary to the law of the land in violation of Article 23 of the Maryland Declaration of Rights, (2) that it constitutes an unlawful delegation to private individuals, without adequate standards, of the legislative power to fix prices, and (3) that it violates the supremacy clause of the Maryland Constitution, Article 2, Declaration of Rights.

The appellant does not contend that the provision violates due process under the Fourteenth Amendment to the United States Constitution, or the commerce clause. The due process question appears to have been definitely settled by the Supreme Court. See Old Dearborn Distributing Co. v. Seagram-Distillers Corp., 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109; Schwegmann Bros. Giant Super Mkts. v. Eli Lilly & Co., 5 Cir., 205 F.2d 788, certiorari denied 346 U.S. 856, 905, 74 S.Ct. 71, 98 L.Ed. 369; Lionel Corp. v. S. Klein on the Square, Inc., 307 N.Y. 229, 120 N.E.2d 802, dismissed for want of a substantial Federal question, 348 U.S. 860, 75 S.Ct. 88, 99 L.Ed. 677; Lionel Corp. v. Grayson-Robinson Stores, 15 N.J. 191, 104 A.2d 304, dismissed for want of a substantial Federal question, 348 U.S. 859, 75 S.Ct. 87, 99 L.Ed. 677; General Electric Co. v. Masters, Inc., 307 N.Y. 229, 120 N.E.2d 802, dismissed for want of a substantial Federal question, 348 U.S. 892, 75 S.Ct. 215, 99 L.Ed. 701. These cases also dispose of any contention based on a claim of violation of the Federal Constitution by interference with the power of Congress to legislate in matters of interstate commerce.

The first consideration of the Maryland Fair Trade Act by this Court was in Goldsmith v. Mead Johnson & Co., 176 Md. 682, 686, 7 A.2d 176, 178, 125 A.L.R. 1339. It was there noted that 'In construing this article of the Declaration of Rights, the decisions of the Supreme Court on the Fourteenth Amendment are 'practically direct authorities." It was held that the Act did not violate due process or the law of the land. The decision was followed in Schill v. Remington Putnam Books Co., 179 Md. 83, 17 A.2d 175, 22 A.2d 128. As noted in the Goldsmith case, the Maryland statute is substantially identical with the statutes enacted in forty-four other states. Prior to 1951, the validity of these statutes had been upheld by courts of last resort in sixteen states. The only dissenting voice was raised in Liquor Store v. Continental Distilling Corp., Fla., 40 So.2d 371. Encouraged by certain language in the majority opinion in Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035, which did not deal with a constitutional question, but held that the Sherman Act, 15 U.S.C.A. §§ 1-7, 15 note, was not modified by the Miller-Tydings Act so far as non-signers are concerned, attempts were made to induce courts to re-examine their prior decisions upholding the validity of the non-signer provisions of the Fair Trade laws. In no case have these efforts been successful. See Scoville Mfg. Co. v. Skaggs Pay Less Drug Stores, Cal., 291 P.2d 936; General Elec. Co. v. Klein, Del., 106 A.2d 206; Lionel Corp. v. Grayson-Robinson Stores, supra; General Electric Co. v. Masters, Inc., supra; Burche Co. v. General Electric Co., 382 Pa. 370, 115 A.2d 361; Seagram Distillers Co. v. Corenswet, Tenn., 281 S.W.2d 657; Bulova Watch Co. v. Anderson, 270 Wis. 21, 70 N.W.2d 243. See also Schwegmann Bros. Giant Super Mkts. v. Eli Lilly & Co. supra.

The appellant contends that our holding in the Goldsmith case is not controlling because conditions in the market are different today, and because the application of the statute to a method of doing business shown in detail in the stipulation of facts was not before this Court in the Goldsmith case. The argument is that although the necessity for resale price maintenance to protect manufacturer good will may have been fairly debatable at the time of the Old Dearborn decision, and hence within the police power of the state, experience has demonstrated that the statutes are now accomplishing a result at variance with their original purpose. It is said that the provision tends to establish uniform prices for all types of outlets, regardless of costs, efficiency and service, impedes innovation, forces a merchandising stress upon service, preserves high costs of distribution, and removes incentives to efficiency produced by competition in the retail market--all at a time when loss leader problems are relatively insubstantial and can be met by the less generalized legislation against sales below cost. It is argued that the fair trade legislation gives the brand owner protection that he does not need, at the expense of the consumer and the general public. 'In short, while the good will of a manufacturer is entitled to reasonable protection, the legislature cannot protect the manufacturer's prices from legitimate price competition.'

We find no merit in the contention. If we were disposed to re-examine the decision in the Goldsmith case, we think it is clear that the arguments advanced by the appellant go primarily to the wisdom of the statute. In General Electric Co. v. Klein, supra, 106 A.2d at page 210, the court said:

'* * * these objections must depend for their validity upon the tacit assumption that resale price maintenance is so clearly unsound economically that a court can say without hesitation that the legislative findings to the contrary have no reasonable basis to support them. * * * The economic soundness of retail price maintenance is not an open-and-shut question. It has been a subject of keen controversy for many years, and there are two schools of thought upon the matter. Before the passage of the McGuire Act--to go back no further than 1951--the House Committee on Interstate and Foreign Commerce held extensive hearings upon the subject. A sharp cleavage of views developed. For example, the Federal Trade Commission opposed resale price maintenance; the Department of Commerce favored it, concluding that 'the case against fair trade is more theoretical than real'. Again, the various aspects of the subject are reviewed in the majority and minority reports of the House Committee on the Judiciary on a bill to amend the Sherman Act, in which the divergent views of the two schools of thought are set forth. One insists that resale price maintenance is bad for all--manufacturer, retailer and consumer; the other asserts that it is good for all.

'It would serve no purpose to marshal the arguments pro and con. That is not our function. In these circumstances the duty of the Court is plain. The question before us is not the wisdom of this legislation; it is whether the situation presents a reasonable necessity for the protection of the public welfare, and whether the means bear a reasonable relation to the end sought. * * * And if these questions are fairly debatable, the legislative judgment must control. * * *

'Not only are these questions 'fairly debatable'; they have been warmly debated for years, and the debate, we gather, is still going on. The legislative judgment must therefore prevail.'

The case of Cohen v. Frey & Son, Inc., 197 Md. 586, 80 A.2d 267, is clearly distinguishable. That case dealt with the Unfair Sales Act of 1941, Code 1951, Art. 83, secs. 111-115. Cf. Blum v. Engelman, 190 Md. 109, 57 A.2d 421. In Dundalk Liquor Co. v. Tawes, 201 Md. 58, 63, 92 A.2d 560, 562, Judge Markell for the Court pointed out that 'We have ruled upon the validity of these various statutes with varying results according to the facts of each case and the provisions of each statute, but never by overruling the legislative judgment on so debatable a question as the relative economic and political merits and demerits of...