Pepsodent Co. v. Krauss Co.

• Decision Date: 07 May 1942
• Docket Number: 36414.,36413
• Court: Louisiana Supreme Court
• Parties: PEPSODENT CO. v. KRAUSS CO., Limited. INTERNATIONAL CELLUCOTTON PRODUCTS CO. v. SAME.

9 So.2d 303

200 La. 959

PEPSODENT CO. v. KRAUSS CO., Limited.

INTERNATIONAL CELLUCOTTON PRODUCTS CO. v. SAME.

Nos. 36413, 36414.

Supreme Court of Louisiana

May 7, 1942

Rehearing Denied May 25, 1942.

Robert F. Carney and G. Kenneth Crowell, both of Chicago, Ill. (Monroe & Lemann, of New Orleans, of counsel), for plaintiffs and appellants.

Milling Godchaux, Saal & Milling, of New Orleans, for defendant and appellee.

E Howard M'Caleb, of New Orleans, amicus curiae.

PONDER Justice.

In these consolidated proceedings, the plaintiffs are seeking to enjoin the defendant from advertising for sale, selling or offering for sale, products which bear, or the labels or containers of which bear, the respective trade marks of the plaintiffs at less than the minimum prices prescribed by plaintiffs, respectively, in contracts which they have made with other local retail dealers.

The plaintiffs applied for preliminary injunctions in the lower court which were excepted to by the defendant on the ground that Act 13 of 1936, the Louisiana Fair Trade Act, is unconstitutional in that the statute violates Section 14 of Article XIX of the Constitution of 1921, as originally adopted and as amended and reenacted, and on the alternative ground, in event the Court should not hold the Fair Trade Statute unconstitutional, then, in that event, the petitions for the preliminary injunctions do not set forth a right or cause of action under the laws of the State of Louisiana. The exceptions were sustained, and the lower court gave judgment, dismissing the plaintiffs' suits. The plaintiffs have appealed.

The plaintiff Pepsodent Company, is engaged in the business of producing, distributing and selling antiseptics, tooth paste, tooth powder, liquid dentifrices, and other commodities bearing, or the labels or containers of which bear, the trade mark or name of the plaintiff, the exclusive property of the plaintiff, which are identified as having been manufactured and distributed by it.

The plaintiff, International Cellucotton Products Company, is engaged in the business of distributing and selling sanitary napkins, facial tissues, and related commodities, all of standard quality and bearing, or the labels or containers of which bear, the trade mark or name of the plaintiff, the exclusive property of the plaintiff, which are identified as having been manufactured and distributed by it.

Different plaintiffs are involved in these suits, but they are brought against the same defendant. While the petitions in the suits are not identical, yet they are to the same effect, viz., that the plaintiffs have entered into contracts, establishing minimum prices for the sale of their products in Louisiana with a large number of retailers, other than the defendant, pursuant to Act 13 of 1936, the Louisiana Fair Trade Act, and that due notice of the existence of such contracts was given to the defendant. It is alleged that the defendant wilfully and knowingly advertised and offered for sale at its retail store in New Orleans, Louisiana, products manufactured by the plaintiffs, and bearing their trade marks, labels and names at prices less than those established in the plaintiffs' contracts, all in violation of Section 2 of the Louisiana Fair Trade Act, which constitutes unfair competition on the part of the defendant and has caused irreparable damage and injury to the plaintiffs. These consolidated cases present two identical questions for our determination; namely, the first question is whether or not the Fair Trade Act of this State is violative of Section 14 of Article XIX of the Louisiana Constitution; and secondly, whether or not the contracts with the other retailers comply with the Fair Trade Act, in event it is held that the statute is not violative of the Constitution.

We will first consider whether or not the plaintiffs' contracts with other retail dealers comply with the Fair Trade Act. The defendant takes the position that Act 13 of 1936 does not legalize contracts containing provisions to the effect that the retailer will not sell 'at a price less than the minimum retail or resale price,' but, on the contrary, it permits only contracts which provide that the buyer will not resell the commodity except at the exact price stipulated by the vendor. Defendant relies, in support of its contention, on the cases of Mennen Company v. Krauss Company, D.C., 37 F.Supp. 161; Town of Lonoke v. W. Y. Bransford & Son, 141 Ark. 18, 216 S.W. 38; and Brown v. Baker, 108 Wash. 161, 183 P. 89.

The pertinent provisions of Act 13 of 1936, the Fair Trade Act of this State, are as follows:

'The Louisiana Fair Trade Act'

'An Act to protect trade mark owners, distributors and the public against injurious and uneconomic practices in the distribution of articles of standard quality under a distinguished trade mark, brand or name.

'Section 1. Be it enacted by the Legislature of Louisiana, That no contract relating to the sale or resale of a commodity which bears, or the label or content [container] of which bears, the trade mark, brand, or name of the producer or owner of such commodity and which is in fair and open competition with commodities of the same general class produced by others shall be deemed in violation of any law of the State of Louisiana by reason of any of the following provisions which may be contained in such contract:

'1. That the buyer will not resell such commodity except at the price stipulated by the vendor.

'2. That the vendee or producer require in delivery to whom he may resell such commodity to agree that he will not, in turn, resell except at the price stipulated by such vendor or by such vendee.

'Such provisions in any contract shall be deemed to contain or imply conditions that such commodity may be resold without reference to such agreement in the following cases:

'1. In closing out the owner's stock for the purpose of discontinuing delivering any such commodity.

'2. When the goods are damaged or deteriorated in quality, and notice is given to the public thereof.

'3. By any officer acting under the orders of any court.

'Section 2. Wilfully and knowingly advertising, offering for sale or selling any commodity at less than the price stipulated in any contract entered into pursuant to the provision of Section 1 of this Act, whether the person so advertising, offering for sale or selling is or is not a party to such contract, is unfair competition and is actionable at the suit of any person damaged thereby.

'Section 3. This Act shall not apply to any contract or agreement between producers or between wholesalers or between retailers as to sale or resale prices.

'Section 4. The following terms, as used in this Act, are hereby defined as follows:

"Producer' means grower, baker, maker, manufacturer or publisher.

"Commodity' means any subject of commerce.

'Section 5. If any provision of this Act is declared unconstitutional it is the intent of the Legislature that the remaining portions thereof shall not be affected but that such remaining portions remain in full force and effect.

'Section 6. This Act may be known and cited as 'Fair Trade Act."

In construing the statute involved herein, it is necessary to ascertain the legislative intent, and the reason which induced the Legislature to enact it should be considered in determining its meaning. Gremillion v. Louisiana Public Service Commission, 186 La. 295, 172 So. 163. Courts will construe a statute so as to accomplish the purpose for which it was enacted and to give effect to the legislative will. Galloway v. Wyatt Metal & Boiler Works, 189 La. 837, 181 So. 187. In interpreting a part or section of an act, in dispute, the part or section should be interpreted with the rest of the act. Bradley v. Swift & Company (Balthazer v. Swift & Co.), 167 La. 249, 119 So. 37.

The purpose of the Act as stated in its title is 'to protect trade mark owners, distributors and the public against injurious and uneconomic practices in the distribution of articles of standard quality under a distinguished trade mark, brand or name.' A careful reading of the Act shows that its aim or purpose is to be effectuated or carried out by preventing price cutting. A reading of Section 1 of the Statute, without taking into consideration its other provisions, might lead to the conclusion that the Statute permits only contracts which provide for sales and resales at a fixed or exact price. However, when Section 1 is considered with the other sections of the Statute, especially Section 2, in the light of its purpose or aim, the conclusion is inescapable that a minimum price is contemplated. If it were otherwise, some restriction would have been placed on sales at prices in excess of those stipulated in the contract. It is only the sales of commodities at prices less than those stipulated in the contract which are declared to be unfair competition and actionable at the suit of any person who may be damaged thereby. Since the statute precludes sales at prices less than those stipulated in the contract and places no restriction on sales at prices in excess of those stipulated, the statute is in effect establishing a minimum price. Our conclusion, therefore, is that a contract which provides that the seller will not resell the commodity at less than the minimum retail or resale price complies with the statutory requirements of the Louisiana Fair Trade Act.

The Fair Trade Acts of at least fifteen other states have provisions similar to those contained in the Louisiana Fair Trade Act, to the effect that the buyer will not resell the commodity except at the price stipulated. In many of these states, the courts have entertained contracts, containing provisions that the buyer will not resell a commodity...