Schill v. Remington-Putnam Book Co.

• Decision Date: 08 April 1943
• Docket Number: 11.
• Citation: 31 A.2d 467,182 Md. 153
• Parties: SCHILL v. REMINGTON-PUTNAM BOOK CO.
• Court: Maryland Court of Appeals

31 A.2d 467

182 Md. 153

SCHILL v. REMINGTON-PUTNAM BOOK CO.

No. 11.

Court of Appeals of Maryland

April 8, 1943

Rehearing Denied June 2, 1943.

See 32 A.2d 296.

Appeal from Circuit Court No. 2 of Baltimore City; Eli Frank and George A. Solter, Judges.

Suit by the Remington-Putnam Book Company against R. Lyle Schill trading as Schill's Book Shop to enjoin defendant from violating terms of fair trade contract. From a decree sustaining a demurrer to answer, and granting injunction defendant appeals.

Decree reversed and bill of complaint dismissed.

Herbert M. Brune, Jr., of Baltimore (Brune & Gordon of Baltimore, on the brief), for appellant.

Michael F. Delea, of Baltimore (James M. Hoffa, of Baltimore, on the brief), for appellee.

Before SLOAN, DELAPLAINE, COLLINS, MARBURY, GRASON, and MELVIN, JJ.

COLLINS Judge.

The Remington-Putnam Book Company, on February 8, 1940, filed in Circuit Court Number 2 of Baltimore City, a bill of complaint against the appellant here, Schill's Book Shop, alleging in effect, among other things, that it had entered into a Fair Trade Contract under the Acts of 1937, Chapter 239 and Acts of 1939, Chapter 248, known as the 'Fair Trade Act', with Simon & Schuster, Inc., a book publisher and filed therewith the publisher's price list showing the books protected under the contract. The bill further alleged that the appellant knew at all times of the Fair Trade Contract between the appellee and Simon & Schuster, Inc., and in spite of such knowledge and the fact that he had been repeatedly requested to desist from the violation of the contract previously entered into between Remington-Putnam Book Company and Simon & Schuster, Inc., that Schill had repeatedly violated the terms of said contract and the price list by selling books on the protected price list at a discount. Remington-Putnam Book Company asked for an injunction against the defendant, Schill, enjoining and restraining him from violating the terms of said contract. Schill filed a demurrer and answer which demurrer was overruled by the Chancellor and an appeal was taken to this court. In an opinion reported in 179 Md. 83, 17 A.2d 175, 22 A.2d 128, this Court held: (1) That copyrighted books are within the purview of the Maryland Fair Trade Act: (2) That the price of the book in question was sufficiently definite and (3) That the exemption in the contract did not render it unenforceable.

After the appeal Schill twice amended his answer, the last amendment being the same as that originally filed except that he added forty sections thereto, numbered D-1 to D-40. As well summarized by the Chancellor, the amended answer alleges in part and in substance as follows:

'that the contract between Simon and Schuster, Inc., and plaintiff, which is the basis of the present suit, is part of an organized attempt by an illegal combination of publishers, acting in concert, to monopolize and control the entire system of book distribution in Maryland and elsewhere. That early in 1937 these publishers entered into a conspiracy in violation of the Sherman Anti-Trust Law, 15 U.S.C.A. § 1-7, 15 note, which continues to the present time, to fix and maintain prices for new books throughout the United States. The country's leading booksellers, including plaintiff, were associated in the conspiracy. The conspirators caused identical contracts to be executed by each publisher with a cooperating bookseller in each state, which, like Maryland, had enacted a Fair Trade Act, for the purpose of raising and fixing retail prices on substantially all books published by the conspiring publishers; that the contract involved in this case is one executed in furtherance of said conspiracy as an integral part thereof.

'The conspirators, both publishers and sellers, collaborated in producing a form of contract similar to that filed as an Exhibit with the Bill herein, and agreed to use and further the use of this form. From the Spring of 1937 practically all current trade books were price fixed in New York under agreements requiring retailers to observe fixed prices, excepting sales by book clubs to their members. A rigid price structure was thus set up in the State of New York by joint action of the conspirators. The Tydings-Miller amendment to the Sherman Act was enacted, 15 U.S.C.A. § 1, and in the Fall of 1937 the conspirators proceeded to extend the New York conspiracy to 41 other states, including Maryland. At this time, if not before, plaintiff entered directly into the conspiracy and ratified, confirmed and adopted the previous activities of the conspirators of which it was at all times fully informed. By the end of 1937 practically all current trade books were price fixed under a standard form of agreement, requiring retailers to observe fixed prices. The effect was to set up a rigid and uniform scale of prices for all trade books of different publishers sold in interstate commerce, all in accordance with the joint intention of the conspirators. By the end of December 1937, plaintiff had solicited and obtained price fixing contracts from all the leading publishers, pursuant to the conspiracy. A joint enforcement committee of publishers and booksellers was set up, retaining common counsel and soliciting and collecting funds from publishers and booksellers for a joint enforcement effort. Through this committee and its counsel, at the instance of plaintiff, defendant was repeatedly harassed and the present and other suits were instituted by plaintiff in pursuance of the combination and conspiracy. Plaintiff contributed to a fund raised by numerous publishers and booksellers to prosecute legal proceedings against R. H. Macy & Co., Inc., of New York City, in furtherance of the purposes of the conspiracy.'

After argument and reargument, the Chancellor below sustained the demurrer to the answer. The following stipulation was entered into by counsel:

'It is hereby stipulated and agreed by and between counsel for Complainant and Respondent, for purposes of trial of this case, that the facts stated in the Bill of Complaint are true and correct; provided that, as to the Respondent's knowledge of the contract referred to in Paragraph Fifth (Complainant's Exhibit No. 1) at and prior to the sale referred to in Paragraph Seventh, Respondent merely waives proof thereof, to the end that the Court may enter a decree with like effect as if the same were fully established by proof.

'And it is further stipulated and agreed by and between counsel for Complainant and Respondent, in order to save time at the trial of this case, that Respondent is prepared to proffer certain testimony in support of the affirmative defenses raised in his Second Amended Answer, but in view of the Order of Court sustaining Complainant's demurrer to said affirmative defenses, a formal proffer of such testimony is dispensed with; and the absence of such formal proffer shall not be construed as a waiver or relinquishment of the right to assert said defenses by appeal from the decision of this Court.'

A decree was then passed by the Chancellor on the eleventh day of June, 1942, ordering that the injunction as prayed be issued. An appeal is taken to this Court from that decree by R. Lyle Schill, trading as Schill's Book Shop, appellant, against the Remington-Putnam Book Company, a body corporate, appellee.

The part of the Sherman Act, as amended, 15 U.S.C.A. § 1, which is allegedly violated is as follows: 'Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal: Provided, That nothing herein contained in sections 1-7 of this title shall render illegal, contracts or agreements prescribing minimum prices for the resale of a commodity which bears, or the label or container of which bears, the trade mark, brand, or name of the producer or distributor of such commodity and which is in free and open competition with commodities of the same general class produced or distributed by others, when contracts or agreements of that description are lawful as applied to intrastate transactions, under any statute, law, or public policy now or hereafter in effect in any State, Territory, or the District of Columbia in which such resale is to be made, or to which the commodity is to be transported for such resale, and the making of such contracts or agreements shall not be an unfair method of competition under section 5, as amended and supplemented, of this title: * * *.'

In the amended answer are conclusions of law drawn by the pleader from facts stated in the answer which, of course, are not admitted by the demurrer. Miller Equity Procedure, p. 172; Ulman v. Charles St. Ave. Co., 83 Md. 130, 144, 34 A. 366. The amended answer, however, does charge that the contract between the appellee and Simon & Schuster, Inc. under the Maryland statute valid on its face, was entered into in restraint of trade in interstate commerce, in furtherance of a conspiracy between the publishers and booksellers under a price-fixing conspiracy and therefore, for the purpose of the demurrer alleges a violation of the Sherman Anti-Trust Act, supra. Appellee cites the case of the National Fireproofing Co. v. Mason Builders' Ass'n, 2 Cir., 169 F. 259, 265, 26 L.R.A.,N.S., 148, in which it was said: 'It is not enough to establish illegality in an agreement between certain persons to show that it works harm to others. An agreement entered into for the primary purpose of promoting the interests of the parties is not rendered illegal by the fact that it may incidentally injure third persons. * * * As a general rule it may be stated that, when the chief object of a combination is to injure or oppress...