Remington Arms Co. v. Lechmere Tire & Sales Co.

• Decision Date: 30 April 1959
• Citation: 339 Mass. 131,158 N.E.2d 134
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: REMINGTON ARMS CO., Inc., v. LECHMERE TIRE & SALES CO.

Page 134

158 N.E.2d 134

339 Mass. 131

REMINGTON ARMS CO., Inc., v. LECHMERE TIRE & SALES CO.

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Feb. 5, 1959.

Decided April 30, 1959.

A. Lane McGovern, Boston (Parker D. Thomson, Cambridge, with him), for plaintiff.

George S. Abrams, Boston (Ruth I. Abrams and George S. Abrams, Boston, with him), for defendant.

Before WILKINS, C. J., and RONAN, SPALDING, WILLIAMS and CUTTER, JJ.

WILKINS, Chief Justice.

This is a suit in equity under the fair trade law, G.L. c. 93, §§ 14A-14D, to enjoin the defendant, a retail dealer, from selling the plaintiff's trade marked rifles and ammunition at prices lower than the minimum retail prices established in fair trade contracts entered into and in force between the plaintiff and various Massachusetts retail dealers. The case was referred to a master whose report has been confirmed. The case is reported without decision by a judge of the Superior Court. G.L. c. 214, § 31.

Remington is a Delaware corporation engaged in the manufacture of a sporting line of firearms and ammunition which bear its trade mark, brand, or name. By advertising it has developed a large and valuable good will.

Lechmere, a Massachusetts corporation, has a large retail establishment in East Cambridge, and is the largest discount house in New England. In its sporting goods department Remington firearms and ammunition and similar products of Remington competitors are sold at retail.

Remington for some years has 'fair traded' firearms and ammunition throughout the United States where fair trade laws existed. It entered into retail fair trade contracts with numerous Massachusetts dealers, stipulating minimum retail prices for its products. In substitution for previous contracts, early in February, 1957, eighty dealers executed retail fair trade contracts governing the sale of firearms, and forty dealers executed similar contracts governing the sale of ammunition. These were executed in this Commonwealth by the dealers and at Bridgeport, Connecticut, by Remington. Lechmere did not sign such a contract although sent a blank form. Remington sells only to wholesale houses. It has no company stores in Massachusetts and does not solicit or sell to the retail trade.

Lechmere's violation of the fair trade law is conceded. Its sole contention is that the omission of Remington, as a foreign corporation, to comply with G.L. c. 181 deprives it of the right of resort to the courts of this Commonwealth. See G.L. c. 181, § 5. Remington has not filed annual certificates of condition under G.L. c. 181, § 12 (as amended through St.1953, c. 351), or a copy of its charter and other information under § 5, or appointed an attorney for the service of process under § 3 (as amended through St.1955, c. 611, § 6). Remington's position is that these sections do not apply to it. Upon this affirmative defence set up in its answer, the burden of proof is upon Lechmere. Friedenwald Co. v. Warren, 195 Mass. 432, 435, 81 N.E. 207.

Remington's home office and principal place of business are in Bridgeport, where its ammunition is manufactured. Its rifles are manufactured at factories in Ilion, New York, and Findley, Ohio. It has no factory, plant, or warehouse in this Commonwealth, and renders no repair service here. It has maintained an office in Boston for many years. Its name is in the telephone and city directories, and appears on the building listing of tenants and on the office door. Also on the door is 'Thomas F. Parker, Manager.'

All the office furniture and equipment are owned by Remington. These include filing cabinets, which contain correspondence, stationery, activity reports, duplicates of orders, shipping documents pertaining to business originating in New England, and miscellaneous papers pertaining to the work of the office. The letterheads for local use bear in conspicuous type the name 'Remington,' a statement of its business, and the address, 'Bridgeport 2, Conn.' Some bear the words 'District Office,' others 'District Sales Office,' and the location in Boston. Six or seven sample guns are kept on the premises for exhibition to interested callers and for display by Parker in his field canvass of wholesale houses. With this exception, Remington does not keep or store in this Commonwealth any inventory of guns, ammunition, or spare parts. In the office there are chevrons or brassards for skeet and trap shooting which are supplied on request to gun clubs for awards to members. The only other property here is two automobiles 'registered in Massachusetts with mail addresses in Boston and Bridgeport.'

The office is maintained for Parker as Remington's New England district manager. He is a resident of this Commonwealth. The only person with full and regular time attendance at the office is a woman secretary. Approximately one half of Parker's time is spent on the road in the various New England States. He has the assistance of two field men, one a resident of Maine and the other of western Massachusetts. Principally engaged in soliciting the wholesale trade, the latter call at the office infrequently, and attend three or four conferences a year at which the program for soliciting business from wholesale dealers in the New England States is discussed. Parker swears to bills in equity brought against Massachusetts violators. In cases instituted against violators in the Superior Court, Suffolk County, one in 1956 and the other in 1957, venue, otherwise lacking, was had by alleging that Remington had a usual place of business in Boston.

Parker's principal activity, requiring the major part of his time, is the solicitation of orders from wholesalers throughout New England. He and his two assistants from time to time call on some of the larger retail dealers to observe the display of Remington products, feel the pulse of the trade, and check fair trade prices to be sure that they are maintained. They discuss with those dealers any sales problems, and generally endeavor to promote good will, but they do not solicit retail business or effect sales. On rare occasions Parker receives a complaint from a wholesaler concerning a late shipment or quality. He generally discusses the complaint with the one making it, and tries to straighten the matter out. In some cases he reports the matter to Bridgeport to be dealt with direct.

Every year each of Remington's wholesale customers receives a 'prices and terms' sheet setting forth the terms of sale of its firearms or ammunition. Sales are effected in the following manner: The customer mails an order to Bridgeport, where all orders are accepted or rejected. There an order form is made up, a copy sent to Parker, and an acceptance sent to the customer. Shipments are made f. o. b. the factory. No deliveries are made by, from, or through the Boston office. Invoices are sent the customer from Bridgeport. All remittances are made by the customer to Bridgeport.

The field men have instructions not to accept orders. No payments are made to, and no collections are made by, the Boston office. Parker does not intervene in an effort to induce customers to pay overdue bills. Parker and the employees are paid from Bridgeport. Few customers visit the Boston office. From time to time telephone calls seek information as to where Remington products can be purchased. These inquiries are referred to its wholesale dealers in the area.

Remington holds no meetings of stockholders or of directors in this Commonwealth. No corporate books and records are kept here. It does not advertise in Massachusetts newspapers. Its principal bank accounts are in Bridgeport. There is a $300 bank account in a Boston bank in Parker's name which is used to pay the office rent, telephone bills, postage, and petty expenditures.

Section 5 of c. 181 provides that 'Every foreign corporation of the classes described in section three, before transacting business in this commonwealth, shall, upon payment of the fee provided by section twenty-three, ¹ file * * * a copy of its charter * * * certified * * * by-laws, and a certificate' of certain information as to the corporate officers, meetings, and stock. For failure to comply with §§ 3, 5, and 12 officers are subject to fine and to joint and several liability 'for all debts and contracts of the corporation, except such as relate to interstate commerce, contracted or entered into within this commonwealth or for the purpose of being performed therein, so long as such failure continues. Such failure shall not affect the validity of any contract with such corporation, but no action shall be maintained or recovery had in any of the courts of this commonwealth by any such foreign corporation so long as it fails to comply with said sections.'

By § 3 (as amended through St.1955, c. 611, § 6) 'Every foreign corporation, which does business in this commonwealth or which has a usual place of business in this commonwealth, or owns real property therein without having such a usual place of business, or which is engaged therein' in certain construction work 'shall, before doing business in this commonwealth,' appoint the commissioner of corporations and taxation its agent for the service of process 'in any action or proceeding against it.' In case of noncompliance with § 3, § 3A (inserted by St.1928, c. 98, § 1) provides that a foreign corporation 'in relation to any cause of action or proceeding arising out of such business' shall be deemed to have appointed the commissioner its agent. This means business arising in this Commonwealth. Trojan Engineering Corp. v. Green Mountain Power Corp., 293 Mass. 377, 200 N.E. 117.

Section 12 (as amended through St.1953, c. 351), which prescribes the filing of an annual certificate of condition, applies to 'Every foreign corporation, other than one which is required * * * to make annual returns to the department of public utilities.'

Other penalties may be visited under c. 181. For...