Schenley Products Co. v. Franklin Stores Co.

• Citation: 124 N.J.Eq. 100,199 A. 402
• Decision Date: 17 May 1938
• Docket Number: No. 243.,243.
• Parties: SCHENLEY PRODUCTS CO. et al. v. FRANKLIN STORES CO.
• Court: United States State Supreme Court (New Jersey)

199 A. 402

124 N.J.Eq. 100

SCHENLEY PRODUCTS CO. et al.

v. FRANKLIN STORES CO.

No. 243.

Court of Errors and Appeals of New Jersey.

May 17, 1938.

Appeal from the Court of Chancery.

Suit by the Schenley Products Company and another against the Franklin Stores Company to enjoin defendant from advertising, offering for sale, or selling, certain whiskies at a price below that fixed for such products in agreements entered into between certain distributors and retailers. From a decree dismissing the bill, 122 N.J. Eq. 69, 192 A. 375, complainants appeal.

Reversed.

Carey & Lane, of Jersey City (Harry Lane, of Jersey City, of counsel), for appellants. Louis B. Englander, of Newark, for respondent.

RAFFERTY, Judge.

This is an appeal from a decree in chancery dismissing the amended and supplemental bills of complaint of appellants and awarding counsel fee, etc.

Complainants below sought, among other things, to enjoin defendant from advertising, offering for sale, or selling, certain whiskies, generally referred to as "Schenley's Products," at a price below that fixed for said products in agreements entered into between certain distributors and retailers pursuant to the provisions of chapter 58, P.L.1935, R.S.1937, 1:1-10, 56:4-3 to 56:4-6, N.J.St.Annual 1935, § § 217 —13 to 217 —17. Respondent is not a party signatory to any of these agreements but, it is alleged, was advised of their existence. Nor was Schenley Products Company, a corporation, etc., a party to any agreement, but it alleges itself to be a person damaged by the acts complained of.

The learned Vice Chancellor dismissed the action because "The foundation of the action is a contract made by or on behalf of the owners of the brands" and "the failure of the pleader to disclose who is the owner of any of the brands or who is the producer of the whiskey, or in whose behalf the contract was made."

In this it is clear that the learned Vice Chancellor fell into error. A reading of the statute discloses no such requirement as thus laid down. It provides merely that no contract shall be deemed in violation of any law of this State for the reason that the buyer agrees not to resell a commodity bearing the trade-mark, brand, or the 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, except at the price stipulated by the vendor; or, where the vendee or producer shall require, in delivery to whom he may resell such commodity, an agreement that the purchaser will not, in turn, resell except at the price stipulated by such vendor or vendee. The act further provides that willfully and knowingly advertising, offering for sale, or selling, any commodity at less than the price stipulated in any contract entered into pursuant thereto, whether the person so doing is or is not a party to such contract, is unfair competition and is actionable at the suit of any person damaged thereby.

The amended and supplemental bills of complaint filed herein are framed within the statute and without doubt should have been retained in the court below and defendant required to plead thereto. The pleadings set forth amply an agreement between Gillhaus Beverage Company, Inc., a corporation of the State of New Jersey, a distributor, as seller, and one Lutz, a retailer, as buyer, not to resell specified trade-marked liquors except at the prices stipulated by the vendor Gillhaus, etc., and, that respondent willfully and knowingly advertised, offered for sale, or sold, the commodity at less than the prices set down in such contract, to the damage of the parties appellant.

To assert that the contract must be made by or on behalf of the owner of the trademark or brand, or by or on behalf of the producer of the commodity bearing the trade-mark or brand, is to import into the statute that which is clearly not within its provisions and that which is unnecessary to its operation. In the case of Old Dearborn Distributing Co. v. Seagram-Distillers Corp., 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, 106 A.L.R. 1476, a decree of the state courts of Illinois sustaining the validity of the Fair Trade Act of that state, Smith-Hurd Stats. c. 121 1/2, § 188 et seq., was affirmed, and the United States Supreme Court, in setting forth the facts, stated (page 141): "Appellee is a dealer in alcoholic beverages at wholesale. It buys the products here in question from the producers. The whiskies bear labels and trademarks, and are in fair and open competition with commodities of the same general class produced by others." The limitation of the statute is that the commodity itself or the label or content of the commodity shall bear "the trade-mark, brand, or the name of the producer or owner"...