Merchant Suppliers Paper Co. v. Photo-Marker Corp.

• Decision Date: 26 December 1967
• Docket Number: PHOTO-MARKER
• Citation: 29 A.D.2d 94,285 N.Y.S.2d 932
• Parties: MERCHANT SUPPLIERS PAPER CO., Inc. and Marker Duplicates, Inc., Plaintiffs-Respondents, v.CORPORATION and Corio Fashions, Inc., et al., Defendants-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 932

285 N.Y.S.2d 932

29 A.D.2d 94

MERCHANT SUPPLIERS PAPER CO., Inc. and Marker Duplicates Inc., Plaintiffs-Respondents, v. PHOTO-MARKER CORPORATION and Corio Fashions, Inc., et al Defendants-Appellants.

Supreme Court, Appellate Division, First Department.

Dec. 26, 1967.

James P. Durante, New York City, of counsel (Lawrence W. Boes, New York City, with him on the brief; Reavis & McGrath, New York City, attorneys) for defendant-appellant Photo-Market Corp.

Martin W. Fogel, New York City, of counsel (Ruben Schwartz, New York City, attorney) for defendant-appellant Corio Fashions, Inc.

Benjamin Gassman, New York City, of counsel (Raphael, Searles & Vischi, New York City, attorneys) for plaintiffs-respondents.

Before STEVENS, J.P., and CAPOZZOLI, RABIN, McNALLY, and BASTOW, JJ.

RABIN, Justice.

This is an appeal from an order of the Supreme Court, Special Term, which granted plaintiffs' motion for a preliminary injunction, and denied a cross-motion by the defendants for an order dismissing the complaint for failure to state a cause of action; and, from an order denying defendants' motion for reargument.

Plaintiffs for some time preceding this action were engaged in the manufacture, sale and distribution of deplicating machines and sensitized photocopy paper for use in those machines. They allege that for some time prior to the commencement of this action they created a machine denoted the '72 Inch Giant Marker-Maker'; that this machine was the widest machine made for its purpose; and, that this machine was, by reason of the width of its reproductions, unique in the industry. Plaintiffs further allege that they developed a sensitized paper to be used exclusively with the 'Marker-Maker'.

A quantity of these machines was sold to various manufacturers of ladies' and children's wearing apparel. Defendant, Corio Fashions, Inc., was one such purchaser.

The written contract of sale is bereft of any conditions limiting the use of the machine by defendant Corio. However, it is alleged by the plaintiffs that in addition to the written contract, they and Corio agreed orally that the machine would not be removed from the premises of Corio; that it would be used solely by Corio, and not for or by any other person or corporation; and, that the machine was not to be transferred, sold, loaned or given to any other person.

Defendant, Photo-Marker Corporation, is a competitor of the plaintiffs in the manufacture, distribution and sale of copying machines and sensitized paper. Plaintiffs allege that Corio permitted Photo-Marker to remove the 'Marker-Maker' from Corio's premises. They further allege that Photo-Marker took the machine to its own premises, disassembled it, copied its special features and is presently selling a similar machine for a price less than that charged by plaintiffs.

Plaintiffs bring this action for a permanent injunction, enjoining the defendant, Photo-Marker, from manufacturing, selling or distributing the machine in issue and for damages against both defendants based upon the foregoing and for conspiring to accomplish their ends. Plaintiffs do not claim that Photo-Marker is attempting to 'palm-off' its machine as that of the plaintiffs.

Plaintiffs' case is predicated upon the validity of the alleged oral conditions which, they claim, are part of the contract of sale. Even if we construe plaintiffs' complaint in its most favorable light, that is, assuming that the oral conditions were actually agreed upon, and that proof of such agreement is not barred by the parol evidence rule, as defendants claim it is, we conclude that the plaintiffs have failed to state any valid cause of action. The attempt to restrict defendant Corio's right to sell, lend or lease the machine, even after title has vested in it, is an attempt to restrict competition. Thus, plaintiffs are attempting to accomplish by indirect means what they may not accomplish directly. Moreover, plaintiffs are attempting, in effect, to establish a patent--one not granted by the federal government.

Although state courts are loathe to apply federal antitrust law, 'a contract may so violate the anti-trust laws as to be unenforceable in the state courts * * *.' American Broadcasting-Paramount Theatres, Inc. v. American Manufacturers Mutual Insurance...