Prescription House v. Anderson, Civil Action No. 529.

• Decision Date: 11 December 1941
• Docket Number: Civil Action No. 529.
• Parties: PRESCRIPTION HOUSE, Inc., v. ANDERSON et al.
• Court: U.S. District Court — Southern District of Texas

42 F. Supp. 874

PRESCRIPTION HOUSE, Inc., v. ANDERSON et al.

Civil Action No. 529.

District Court, S. D. Texas, Houston Division.

December 11, 1941.

Sears, Blades, Moore & Kennerly, by Fred W. Moore, all of Houston, Tex., for plaintiff.

Canessa, Romberg & Cherry, by J. W. Cherry, all of Houston, Tex., for defendants.

KENNERLY, District Judge.

This is a suit by Plaintiff, a Texas corporation, against James Anderson, an employee of Plaintiff, and nine other of its employees and former employees,¹ for a Declaratory Judgment, Section 400, Title 28, U.S.C.A., fixing and declaring the rights of Plaintiff and Defendants under contracts under which Plaintiff employed Defendants, when considered in the light of, and as affected by, the Fair Labor Standards Act of 1938, Sections 201 to 219, Title 29, U.S.C.A. Defendants' Answer in effect denies the material allegations in Plaintiff's complaint, and shows an actual controversy between the parties within the meaning of the Declaratory Judgment Act.

Defendants have filed a counter-claim or cross-action against Plaintiff, in which they charge Plaintiff with violations of the Fair Labor Standards Act, and seek to recover overtime, etc., under such Act. By agreement of the parties under Rule 42, Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, that Plaintiff's suit for Declaratory Judgment should be first tried, this is a trial of Plaintiff's suit.

The facts are substantially as follows:

(a) Plaintiff is a Texas corporation, and its Charter states the purpose of its incorporation, as follows: "The purpose for which this corporation is formed is to carry on a mercantile business dealing in exclusive prescriptions and sick room supplies, physicians' supplies and all such supplies as pertain to a retail drug business."

(b) Under such Charter, Plaintiff has been in business in the City of Houston, Texas, in this Division and District, since about 1924 or 1925, first under the name of The Prescription House of Houston, Texas, and later by Charter Amendment under the name of The Prescription House, Inc.

(c) During certain periods of such time and since the effective date of the Fair Labor Standards Act of 1938, Plaintiff had in its employ all of the Defendants mentioned in Plaintiff's original complaint, but it has dismissed from this case all of them except those hereinbefore mentioned.

(d) During such time, Plaintiff's main and principal business has been and still is the filling of physicians' prescriptions for the general public and the retail sale to the general public of articles used in the sick room. The major portion of such prescriptions and such sales have been and are to persons residing in, and in the vicinity of, the City of Houston, Texas, but occasionally there was a prescription filled for or a sale made to persons outside of Houston and vicinity, but within Texas. On a very few and rare occasions, the person for whom a prescription was filled would temporarily or permanently leave Texas and have Plaintiff to refill a prescription and send same to him at some point outside of Texas.

During such time, Plaintiff has had a place of business or store in the downtown business district of Houston, in which were and are shelves, showcases, counters, etc., for the display and sale of its drugs and merchandise used in filling prescriptions or sold for use in the sick room. It purchased such drugs and merchandise both within and without the State of Texas, and when same was received, it came to rest and was unpacked, placed on display, or used or held in the store, awaiting its turn to be displayed or used. Neither of the Defendants had anything to do with such drugs and merchandise until placed in Plaintiff's store. Small quantities of such drugs and merchandise which had become stale or unused were, from time to time, shipped back by Plaintiff to the persons from whom purchased, but neither of the Defendants had anything to do with such shipments.

The general public came to Plaintiff's store and purchased Plaintiff's drugs and merchandise directly or through the medium of prescriptions filled from such drugs and merchandise by Plaintiff. The general public also ordered Plaintiff's drugs and merchandise by phone and otherwise, and same was delivered to them by Plaintiff's employees. Since commencing business, Plaintiff has filled more than 385,000 prescriptions, and filled more than 40,000 prescriptions during the year 1940.

(e) During such time, Plaintiff's sales of articles used in the sick room, other than prescriptions, were made to several different classes of persons, i. e.:

To the public generally such as they purchased over the counter in Plaintiff's store or ordered over the telephone or otherwise, and Plaintiff delivered to them in Houston and vicinity.

To a number of physicians in Houston and vicinity. The success of one engaged in the filling of physicians' prescriptions depends to some extent upon the good will and patronage of the physicians. Accordingly, Plaintiff agreed to sell, and has been selling, at a price less than the usual retail price, and slightly above wholesale price, articles other than prescriptions to physicians, not for resale but for use in their offices, in the treatment of their patients. Plaintiff made and makes very little profit on these sales. Similar sales have been made and are being made to several hospitals.

Plaintiff made and is making similar sales to other drug stores, but these are largely made after the wholesale drug houses have closed for the day. These sales to other drug stores are reciprocal in their nature, in that they are largely made in an exchange of courtesies between drug stores.

Similar sales have been made and are being made to the Humble Oil & Refining Company in Houston (from whom Plaintiff purchases certain supplies hereinafter mentioned), not for resale to the public, but for use in its dispensary, and finally by its employees.

(f) Plaintiff's gross income from the filling of prescriptions and the sale of articles used in the sick room was approximately $92,000 in 1939, $91,000 in 1940, and is running substantially the same in 1941. Of this gross income, approximately 65% or more is derived from the filling of prescriptions and the sale of articles used in the sick room to the general public, the other 35% or less being derived from sales of such articles to physicians, hospitals, other drug stores, and the Humble Oil & Refining Company.

(g) Plaintiff has been not only engaged in the business of filling prescriptions and selling articles used in the sick room, but also in a small manufacturing business. Plaintiff had, during part of such time, a prescription or formula of its own which it filled, compounded and manufactured, and sold at both wholesale and retail, principally in Houston and vicinity, but sometimes outside of Houston and vicinity, and sometimes outside of Texas. It was compounded and manufactured in Plaintiff's store. It was a laxative or remedy for constipation and known as "Cremagol". The major portion of its composition is mineral oil and water, but it contains minor medicinal ingredients.

Prior to the filing of this suit, Plaintiff compounded, manufactured, bottled, and sold Cremagol to the public, physicians, hospitals, other drug stores, and the Humble Oil & Refining Company in Houston and vicinity such as it sold articles other than prescriptions used in the sick room as above described, and sold same to drug stores and others outside of Houston and outside of Texas. Since about the time of filing of this suit, Cremagol has been manufactured and sold by another corporation and not by Plaintiff.

Plaintiff's gross income from the sale of Cremagol during 1939 was approximately $12,000, in 1940 approximately $9,700, and during the portion of 1941 during which Plaintiff carried on that business was approximately the same as 1940. During 1939, approximately 13% of Plaintiff's gross income from all sources was from the compounding and sale of Cremagol, during 1940 10%, and so far in 1941 something more than 9%. Of the sales of Cremagol, approximately 85% to 95% have been made in Texas, and 5% to 15% outside of Texas.

(h) The Defendants Ellis Corder, H. O. Fuller, J. B. Light, Herbert Pledger, Howard Pledger, M. O. Schuelke, John Tennison and Ralph Waymire were employed by Plaintiff as delivery men, their duties being to deliver in Houston, and vicinity, prescriptions compounded by Plaintiff, articles used in the sick room, and Cremagol to the public generally, to...