Lionel Corp. v. Grayson-Robinson Stores

• Decision Date: 05 April 1954
• Docket Number: No. A--89,GRAYSON-ROBINSON,A--89
• Citation: 104 A.2d 304,15 N.J. 191
• Parties: LIONEL CORP. v.STORES, Inc., et al.
• Court: New Jersey Supreme Court

Page 191

15 N.J. 191

104 A.2d 304

LIONEL CORP. v. GRAYSON-ROBINSON STORES, Inc., et al.

No. A--89.

Supreme Court of New Jersey.

Argued Feb. 8, 1954.

Decided April 5, 1954.

Samuel Voltaggio, Newark, argued the cause for the appellant.

Sidney A. Diamond, of the New York Bar New York City, argued the cause for the respondent (Meyer E. Ruback, Newark, and Roosevelt, Freidin & Littauer, of the New York Bar, New York City, of counsel; Ruback, Albach & Weisman, Newark, attorneys).

The opinion of the court was delivered by

BURLING, J.

This appeal stems from a civil action instituted for the purpose of obtaining injunctive and compensatory relief under the 'nonsigner' clause of the New Jersey Fair Trade Act, R.S. 56:4--3 et seq., N.J.S.A. The complaint was filed by The Lionel Corporation, a corporation of the State of New York authorized to do business in New Jersey (hereinafter referred to as Lionel), in the Superior Court, Chancery Division. The complaint named as defendant Grayson-Robinson Stores, Inc., a corporation of the State of California authorized to do business in the State of New Jersey, and Grayson-Robinson Stores, Inc., a corporation of the State of California, authorized to do business in the State of New Jersey, trading as S. Klein on the Square (hereinafter referred to as the defendant). The Superior Court, Chancery Division entered summary judgment for the defendant. Lionel Corp. v. Grayson-Robinson Stores, 27 N.J.Super. 54, 98 A.2d 623 (Ch.Div., 1953). Lionel's appeal to the Superior Court, Appellate Division, was certified by us prior to hearing there.

Lionel manufactures and produces 'toy' electric trains, parts, accessories and model railroad equipment under the brand and trade names of 'Lionel' and 'Lionel Trains.' It exercises price regulation by means of resale price maintenance agreements, commonly termed 'fair trade contracts,' and has entered into agreements of that character with retailers in business in this state.

The defendant operates a nationwide chain of retail stores, including one in the City of Newark, New Jersey. The defendant, although no answer has been filed, admits that it did offer for sale, and sold, Lionel's branded and trade-marked products at less than the prices stipulated in Lionel's resale price maintenance agreements, and insists upon its present right to do so. Lionel contends that the defendant has sold Lionel's 'fair trade' protected products at prices as much as 25% To 30% Less than Lionel's resale contract prices. This is supported by affidavits and is not controverted.

Lionel's complaint, hereinabove mentioned, asserting these matters of fact and seeking injunctive relief and compensatory damages in reliance thereon, was filed and service was effected upon the defendant. The latter thereupon moved for summary judgment (without having filed an answer to the complaint, see R.R. 4:58--2, formerly Rule 3:56--2). The defendant's motion for summary judgment asserted: (a) there was no genuine issue as to any material fact challenged and the defendant was entitled to summary judgment as a matter of law, and (b) Lionel's complaint failed to state a claim upon which relief could be granted.

The Superior Court, Chancery Division, granted the defendant's motion and entered summary judgment in favor of the defendant. The opinion filed by the court expressed its findings of fact and conclusions of law. The court concluded that the complaint and affidavits filed showed palpably that there was no genuine issue as to any material fact. Further, the trial court found that the New Jersey Fair Trade Act, R.S. 56:4--3 et seq., N.J.S.A., supra, had been held to be constitutional by New Jersey courts of last resort in reliance upon the United States Supreme Court decision 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), and that the Old Dearborn case, supra, had not been overruled by 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). However, the Superior Court, Chancery Division, determined that price adherence may be secured only by virtue of voluntary agreement and therefore compulsory adherence to resale prices stipulated by the manufacturer or producer, i.e., the adherence to such prices required on the part of a retailer who has not voluntarily become a party to the resale price maintenance agreements, such requirement attaching under the 'nonsigner' provision of the New Jersey Fair Trade Act, R.S. 56:4--6, N.J.S.A., is unconstitutional.

On this appeal several questions are involved. These are grouped into four categories. Principal among these is the general question whether the 'nonsigner' portion of the New Jersey Fair Trade Act, R.S. 56:4--6, N.J.S.A., supra, is constitutional. Secondarily, the questions involved include the constitutionality and application of the McGuire Act, P.L. 542, 82nd Congress, 2nd Session, c. 745, July 14, 1952, 15 U.S.C.A. § 45. Finally, the applicability of the phrase 'price stipulated' as set forth in R.S. 56:4--5, N.J.S.A. and R.S. 56:4--6, N.J.S.A. under the circumstances of this case and the applicability of factual defenses (alleged lack of notice of Lionel's resale price maintenance agreements, alleged unlawful combination, i.e.,

'horizontal' price-fixing) are included among the questions

involved. I. Constitutionality of the New Jersey

Fair Trade Act, R.S. 56:4--3 et seq., N.J.S.A.

The Fair Trade Act is asserted by the defendant to violate the State and Federal Constitutions upon three grounds. The first two of these are: (a) that the Fair Trade Act constitutes a deprivation of property of the defendant without due process of law or a denial of equal protection of the law, in contravention of the 14th Amendment to the United States Constitution, and also of N.J.Const.1947, Art. I, pars. 1, 5, and (b) that the Fair Trade Act constitutes an unlawful delegation of legislative power, see N.J.Const.1947, Art. IV, Sec. I, par. 1, and in this respect also violative of the due process clause of the 14th Amendment, supra. The third ground of constitutional attack, that the act creates an unlawful burden upon interstate commerce and therefore violates Art. I, sec. 8, of the United States Constitution, will be adverted to in our conclusion, Post, concerning the McGuire Act.

This appeal is the first occasion on which an appeal to this court has expressly raised the question of constitutionality of the Fair Trade Act in relation to due process of law, equal protection of the law and delegation of legislative power, although we have heretofore observed in the course of detailing the historical development of 'fair trade' that the former Court of Errors and Appeals in Johnson & Johnson v. Weissbard, 121 N.J.Eq. 585, 587, 191 A. 873 (E. & A. 1937), expressly followed the Old Dearborn case, supra, in this respect. See General Electric Co. v. Packard Bamberger & Co., 14 N.J. 209, 215, 102 A.2d 18 (195o); Johnson & Johnson v. Charmley Drug Co., 11 N.J. 526, 536, 95 A.2d 391 (1953).

We find no basis pertinent to the resolution of the constitutional questions involved upon which to differentiate the Illinois statute considered in the Old Dearborn case, supra, from the New Jersey Fair Trade Act. To overrule the decision of the former Court of Errors and Appeals in Johnson & Johnson v. Weissbard, supra, would require a declaration that we are no longer bound by the Old Dearborn case, supra. It is our conclusion that the Old Dearborn case, supra, has not been overruled by the United States Supreme Court and is dispositive here.

Under the circumstances of this case the application of the New Jersey constitutional provisions is governed by the construction and application accorded the 14th Amendment. As we have heretofore stated, these questions were directly considered and disposed of with a declaration of constitutionality in the Old Dearborn case, supra, and we are bound by that decision of the United States Supreme Court until it is overruled by the United States Supreme Court. In Pennekamp v. State of Florida, 328 U.S. 331, 335, 66 S.Ct. 1029, 1031, 90 L.Ed. 1295, 1297 (1945), the United States Supreme Court expressly declared:

'The Constitution has imposed upon this Court final authority to determine the meaning and application of those words of that instrument which require interpretation to resolve judiciail issues. * * *'

The decision of the United States Supreme Court in Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035 (1951), did not reach the issue of constitutionality of the 'nonsigner' clause of the fair trade acts under the 14th Amendment, but was concerned only with interpretation of the federal anti-trust laws and the application of the 'nonsigner' clauses of state fair trade acts to interstate commerce. Contrary to the argument asserted by the defendant, we cannot Assume that the United States Supreme Court would overrule the Old Dearborn case, supra, if the opportunity to do so should be presented to that tribunal. Such an assumption, even if it were open to us, would be unrealistic in view of the United States Supreme Court's denial of Certiorari in Schwegmann Bros. Giant Super Market v. Eli Lilly & Co., 205 F.2d 788 (C.C.A.5, 1953) certiorari denied 346 U.S. 856, 74 S.Ct. 71, 98 L.Ed, ---, rehearing denied 346 U.S. 905, 74 S.Ct. 217, 98 L.Ed. --- (1953).

II. Interstate Commerce and the McGuire Act

The defendant in the proceedings in the Superior Court, Chancery Division, and on the appeal to this court has contended that the McGuire Act, P.L. 542, 82nd Congress, 2nd Session, c. 745, July 14, 1952, constitutes an unconstitutional delegation by Congress of the power to fix prices and an unconstitutional delegation by Congress of its power to regulate interstate commerce. United States Constitution, Art. I, Sec. 8.

In General...