Katz Drug Co. v. WA Sheaffer Pen Co.
| Decision Date | 01 May 1933 |
| Docket Number | No. 1749.,1749. |
| Parties | KATZ DRUG CO. v. W. A. SHEAFFER PEN CO. |
| Court | U.S. District Court — Western District of Missouri |
Ryland, Stinson, Mag & Thomson, of Kansas City, Mo., for plaintiff.
Lathrop, Crane, Reynolds, Sawyer & Mersereau, of Kansas City, Mo., and E. H. Pollard, of Fort Madison, Iowa, for defendant.
Heretofore this matter was before the court on the question of jurisdiction over the defendant. 6 F. Supp. 210. It was then held that under the provisions of section 22, title 15, U. S. Code (15 USCA § 22), relating to commerce and trade, the defendant was subject to service at its place of business in Iowa on the grounds that it was transacting business in this district, although not found therein.
The question now presented is whether a temporary injunction should issue and whether an action by the defendant against the plaintiff in an Iowa court should be enjoined. Section 26, title 15, U. S. Code (15 USCA § 26), provides for injunctive relief in favor of private parties as follows: "Any * * * corporation * * * shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws * * * when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings."
It is plaintiff's theory that the defendant is and has been operating in violation of the anti-trust laws. The averments of the bill indicate that the defendant is a manufacturer of fountain pens and that it has developed a large demand for its product in interstate commerce. It has endeavored to maintain standard and uniform prices upon its articles. This is done by contract with selected dealers. It refuses to sell to such dealers as may decline to maintain a uniform or standard price. Some of its dealers or patrons removed from the articles purchased by them the serial numbers so that, without detection, they might be able to dispose of said articles to other dealers who would not be bound by the contract to maintain the price. All sales were unconditional and the title passed absolutely to the purchasers. The plaintiff became the owner, by purchase, of a quantity of said articles from which the serial numbers had been removed. Plaintiff avers that it is without knowledge as to who removed such numbers save only that it was done by owners of the articles who were under contract with the plaintiff not to reduce the price.
The defendant instituted a suit in an Iowa court to restrain the plaintiff from selling such articles purchased by it upon the ground that same had been mutilated and altered, and therefore were not the genuine articles put out by the plaintiff in the Iowa suit and the defendant in this suit.
The allegations of plaintiff's bill and the statements of counsel indicate that plaintiff's allegations are true to the effect that the defendant was seeking to maintain uniform prices on its articles.
The first question for consideration is to determine whether it was violating the antitrust laws.
1. In a proper case the manufacturer might have the right to project his control beyond his own sales by contract or agreement. The case at bar is not subject to such provisions. An agreement to maintain prices is void as against public policy unless it be found reasonable and that same was fairly necessary in the circumstances for the protection of the covenantee. Again, the latter principle is inapplicable in the instant case. According to the bill and the statement of counsel, the defendant is operating upon agreements designed to maintain prices after it parted with title to the articles and for the purpose of preventing competition among those who traded in them. Such "agreements or combinations between dealers, having for their sole purpose the destruction of competition and the fixing of prices, are injurious to the public interest and void." Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U. S. 373, loc. cit. 408, 31 S. Ct. 376, 384, 55 L. Ed. 502. According to the foregoing authority the plans of the defendant fall within the principle which condemns contracts of this class.
2. The bill charges that the defendant is violating the anti-trust laws by restraining competition in interstate commerce, and said section 26, title 15, affords to any person or corporation a remedy by injunction "against threatened loss or damage by a violation of the antitrust laws."
It is specifically averred that the suit filed by the defendant in the Iowa court is not only designed to interfere with the plaintiff in its sale of an article of commerce owned by it and free from any contract with the defendant, but that said suit is intended to aid it in unlawfully restraining trade and competition by maintaining price levels. While the Iowa proceedings may appear lawful, yet, according to the bill, they are in furtherance of an illegal act.
The rule was stated in U....
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Vendo Company v. Lektro Vend Corporation
...v. Lanvin Parfums, Inc., 396 F.2d 398 (CA2 1968), cert. denied, 393 U.S. 938, 89 S.Ct. 303, 21 L.Ed.2d 275; Katz Drug Co. v. W. A. Sheaffer Pen Co., 6 F.Supp. 212 (WD Mo.1933). 20 In litigation between a franchisee and a franchisor the former may challenge the validity of various contract p......
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Sprague Electric Co. v. CORNELL-DUBILIER ELECT. CORP.
...jurisdiction under these statutes is given to the United States District Courts. Such was the situation in Katz Drug Co. v. Sheaffer Pen Co., D.C., 6 F. Supp. 212, 214, where the district court enjoined an action in the state court in Iowa. There the court "Under the law, the plaintiff cann......