Philadelphia Record Co. v. Leopold

• Decision Date: 21 August 1941
• Citation: 40 F. Supp. 346
• Parties: PHILADELPHIA RECORD CO. v. LEOPOLD et al.
• Court: U.S. District Court — Southern District of New York

40 F. Supp. 346

PHILADELPHIA RECORD CO. v. LEOPOLD et al.

District Court, S. D. New York.

August 21, 1941.

Lewis Ginsburg, of New York City, for plaintiff.

M. H. Miller, of New York City, for defendant.

RIFKIND, District Judge.

The plaintiff seeks an injunction pendente lite in aid of its action for a permanent injunction.

Since May, 1941 the plaintiff, publisher of a newspaper in the City of Philadelphia, has invited its readers and the public to participate in a puzzle contest known as the "rebus games". Thereby plaintiff expects to increase the circulation of its newspaper. Because of the offer of substantial cash prizes to the successful participants, the contest has attracted a considerable number of entrants in the competition.

Daily since the inception of the game the newspaper has printed a puzzle picture or riddle. Each contestant is required to solve the daily riddle and, weekly, to send the answers to the plaintiff accompanied by ten cents. At the conclusion of the contest, officials named by the plaintiff will determine the winners.

The contest is governed by rules formulated by the plaintiff. To be eligible for a prize a contestant must comply with these rules. No person who has previously won a prize of one hundred dollars or more in any contest is eligible to participate and all contestants who obtain answers by purchase or exchange are disqualified.

It appears from the papers presented that the defendants are engaged in the business of rendering advice and assistance, for a price, in the solution of these puzzles. It is conceded by the defendants that they are professionals in this line of endeavor and are engaged in similar activity in other contests held throughout the country. It is not disputed that defendants are presently soliciting contestants to buy what purport to be solutions of the puzzles in plaintiff's contest; nor is it questioned that sales have been effected.

Both parties are engaged in their respective activities for profit. No question of public interest or policy is involved.

Plaintiff contends that this activity on the part of the defendants tends to destroy the effectiveness of the contest, that it discourages contestants who have not subscribed for defendants' services from continuing in competition, that it vitiates the integrity of the contest and induces breaches of plaintiff's rules which it cannot detect. It is charged that the entrants have placed some measure of blame for this state of affairs upon the plaintiff, believing plaintiff to be guilty of duplicity. Plaintiff argues that the final result is to damage not only the contest and to cheat plaintiff and the contestants out of the prize money but also to do serious injury to the business, reputation, circulation and revenue of the plaintiff.

It cannot be doubted that defendants' activity is injurious to plaintiff's business. The question is whether the injury is of the kind which, in a relatively free economy, the plaintiff is obliged to suffer. Is it akin to lawful competition of which plaintiff cannot complain? The line of demarcation is not always distinct and may vary from generation to generation as standards of business ethics move up and down. Under the circumstances precedents are suggestive but not conclusive.

It is my conclusion that the conduct of the defendants constitutes an unlawful interference with the plaintiff's business and that it may be prevented by injunctive relief.

The right to conduct a lawful business is a property right which may be protected from unlawful interference. Smyth v. Ames, 169 U.S. 466, 18 S.Ct. 418, 42 L.Ed. 819; Scott v. Donald, 165 U.S. 107, 17 S.Ct. 262, 41 L.Ed. 648.

It has been held that a railroad, which sells reduced rate commutation tickets which are designated by their terms to be nontransferable, is entitled to injunctive relief against one purchasing such a ticket and reselling it or re-renting it to others for his own profit. Such conduct has been condemned as an unlawful interference with the business of the railroad. Bitterman v. Louisville & N. R. Co., 207 U.S. 205, 28 S.Ct. 91, 52 L.Ed. 171, 12 Ann.Cas. 693; Long Island R. Co. v. Lanice, Sup., 136 N.Y.S. 138.

In Sperry & Hutchinson v. Mechanics' Clothing Co., C.C., 128 F. 800, the plaintiff was engaged in the business of selling to retail stores in the city of Providence certain "trading stamps" pursuant to a contract...