E. R. Squibb & Sons v. Charline's Cut Rate

• Decision Date: 26 June 1950
• Docket Number: C--1687,Nos. C--1647,s. C--1647
• Parties: E. R. SQUIBB & SONS v. CHARLINE'S CUT RATE, Inc. et al. ELI LILLY & CO. v. CHARLINE'S CUT RATE.
• Court: New Jersey Superior Court

Page 328

9 N.J.Super. 328

74 A.2d 354

E. R. SQUIBB & SONS v. CHARLINE'S CUT RATE, Inc. et al.

ELI LILLY & CO. v. CHARLINE'S CUT RATE.

Nos. C--1647, C--1687.

Superior Court of New Jersey Chancery Division.

June 26, 1950.

Bilder, Bilder & Kaufman, Newark (Samuel Kaufman, Newark, appearing), for plaintiff, E. R. Squibb & Sons.

Lorentz & Stamler, Newark (Joseph H. Stamler, Newark, appearing), for plaintiff, Eli Lilly & Co.

Jacob R. Mantel, Summit, for defendants.

STEIN, J.S.C.

This matter is before the Court upon petition to adjudge the defendants of contempt for violating an injunction. The facts in both cases are similar and will be disposed of together.

On May 5 and May 12, 1950 respectively, a consent judgment was entered in the above entitled causes. Both judgments are similar and contain an injunction against defendants selling, advertising for sale or offering for sale any products of the respective plaintiffs at prices less than the price fixed or established by said plaintiffs pursuant to R.S. 56:4--1 et seq., N.J.S.A.

The parties have consented that I hear the matter of the contempt of the order made by me in the first above entitled cause.

The defendants subsequent to the entry of the judgments, advertised in a public newspaper that a Dunhill Lighter of the value of $2.50 would be given free with every purchase of $2 or more. A postcard to like effect was mailed to numerous persons residing in Summit and its vicinity. The proofs disclose that the defendants on May 25 last, sold Eli Lilly's Multicebrin (100's) and gave the purchaser a Dunhill Lighter free; on May 26 the defendants sold Squibb's Navitol with Viosterol (50 cc's) and gave the purchaser a Dunhill Lighter; on May 27 on two occasions defendants sold a bottle of Squibb's Vitamin Mineral capsules (100), and in each instance gave the purchaser a Dunhill Lighter. In every instance the article sold bore a fixed fair trade price and was sold for such price. Plaintiffs contend that the giving of the Dunhill Lighter with each purchase constituted a sale at less than the fixed fair trade price in violation of the Fair Trade Act, R.S. 56:4--1 et seq., N.J.S.A. They further contend that the advertisement offering the lighter free with purchases of $2 or more also violates the act.

The object and purpose of the Fair Trade Act has been stated in many cases, two of which are Pazen v. Silver Rod Stores, Inc., 130 N.J.Eq. 407, 22 A.2d 237 (E. & A.) and Bristol-Myers Co. v. L. Bamberger & Co., 122 N.J.Eq. 559, 195 A. 625, 626, affirmed 124 N.J.Eq. 235, 1 A.2d 332. In Bristol-Myers v. L. Bamberger & Co. supra, we said, 'The plan established by the Fair Trade Act for the protection of the manufacturer's good will is the elimination of price competition among retailers.' Price competition basically is the endeavor of one retailer to undersell his competitor by offering the same commodity at a lesser price, the object of course being to gain an advantage over his competitor by attracting customers into his place of business. While this may be considered good business advertising, yet it is prohibited by the act when the article offered for sale is a trademarked commodity, the price of which has been fixed or stipulated.

It is not disputed that the Dunhill Lighter which was given with each purchase had a value of $2.50. It cannot reasonably be said, that the giving of such an article with the purchase of a trademarked commodity, does not constitute a reduction in price. Obviously the effect is the same as though a direct reduction had been given by a cash rebate. This is...