Schill v. Remington Putnam Book Co.
| Decision Date | 03 January 1941 |
| Docket Number | 47. |
| Citation | 17 A.2d 175,179 Md. 83 |
| Parties | SCHILL v. REMINGTON PUTNAM BOOK CO. |
| Court | Maryland Court of Appeals |
Rehearing Denied March 5, 1941.
Appeal from Circuit Court No. 2 of Baltimore City; Joseph N. Ulman Judge.
Action by the Remington Putnam Book Company against R. Lyle Schill trading as Schill's Book Shop, to restrain violation of a contract executed under the Fair Trade Act. From an order overruling demurrer to the bill of complaint, the defendant appeals.
Affirmed.
Herbert M. Brune, Jr., of Baltimore (Brune & Gordon, of Baltimore, on the brief), for appellant.
W. H. Crichton Clarke, of New York City (Michael F. Delea, of Baltimore, on the brief), for appellee.
Argued before BOND, C.J., and SLOAN, MITCHELL, JOHNSON, and DELAPLAINE, JJ.
Both the appellant and appellee in this case are booksellers engaged in that line of trade in the city of Baltimore; and this appeal is from an order of the Circuit Court No. 2 of that city, overruling the appellant's demurrer to the appellee's bill of complaint. The basic question raised is whether the Fair Trade Act, as embodied in sections 102 to 110, inclusive, of Article 83 of the Annotated Code of Maryland (1939), is applicable to copyrighted books.
The bill of complaint alleges that pursuant to the provisions of the act the appellee, on November 10, 1939, entered into a contract, to take effect as of November 1, 1939, with Simon & Schuster, Inc., of New York, a publisher engaged in publishing and selling books, that the appellee during the life of the contract would not advertise, offer for sale or sell to any consumer, at less than the fair trade price, any books bearing the publisher's trade-mark, brand or name; it being agreed that the publisher would stipulate a minimum resale price to the consumer in compliance with the Fair Trade Act of this State, in the publisher's current monthly catalog, and that all books contained in said catalog were to be sold at the fair trade price, with exceptions as follows: (a) books sold for circulating or public service purposes and not for resale; (b) charitable, religious or educational purposes at not less than 25 per cent below the fair trade price; (c) sales to book clubs; (d) government agencies; (e) mail order houses selling exclusively by mail; and (f) miscellaneous sales not generally intended for resale by the purchasers. It is further alleged that the appellant was cognizant of the fact that the appellee had entered into the contract referred to, and of the terms and conditions thereof, including the established fair trade price to the consumer; and moreover, that in spite of the fact that the appellant had been repeatedly requested to desist from violations of said contract, he has nevertheless violated the terms thereof, contrary to the provisions of said act; that specific complaint being that the appellant on January 30, 1940, sold to an ultimate consumer a book entitled 'Art Masterpieces' for the sum of $8.50, whereas the minimum consumer's price fixed by said contract was $10. Alleging also that the appellee is without redress in law, the prayer for relief is that the appellant be temporarily and permanently enjoined and restrained from violating said contract.
The Fair Trade Act, as adopted in this State by Chapter 239 of the Acts of 1937, differs but little, if any, from similar legislation now in force in nearly every State in the Union. And it may be added that as far as our investigation goes, wherever the constitutionality of the several state statutes has been challenged, they have been sustained by the appropriate court of last resort. So also the validity of such legislation has been sanctioned by the Supreme Court of the United States. Old Dearborn Distributing Co. v. Seagram-Distillers Corp. (McNeil v. Joseph Triner Corp.), 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109, 106 A.L.R. 1476; Pep Boys, etc., v. Pyroil Sales Co. (Kunsman v. Max Factor & Co.), 299 U.S. 198, 57 S.Ct. 147, 81 L.Ed. 122.
In line with the judicial trend above indicated, this court in the recent case of Goldsmith v. Mead Johnson & Co., 176 Md. 682, 7 A.2d 176, has upheld the constitutionality of the Maryland Fair Trade Act; it being in that case, inter alia, contended that the Act was in conflict with (a) Articles 23 and 41 of the Declaration of Rights of this State, and (b) the 14th Amendment to the Constitution of the United States. So far, therefore, as the act adopted in this State is concerned, the same is a valid exercise of legislative power, and in brief, authorizes and sanctions contracts establishing minimum retail prices on commodities which bear the trade-mark, brand or name of the producers or distributors, and which are in free and open competition with 'commodities of the same general class produced or distributed by others.' It therefore follows that anyone who wilfully and knowingly advertises, offers for sale or sells any commodity at less than the price stipulated in any contract entered into pursuant to the provisions of the act, whether such person is or is not a party to such contract, is engaged in unfair competition, and is subject to suit on the part of any person damaged thereby.
Without challenging the constitutionality of the act, the appellant contends that it cannot and does not cover copyrighted books. Furthermore, it is submitted that regardless of the conclusion of the court as to the main controversial question involved, the instant contract, upon which the bill of complaint is based, contains no proper stipulation as to price, and that its terms are so uncertain, inequitable and unfair, and embrace such unreasonable exemptions, as to preclude its enforcement in a court of equity.
As indicated, it is contended by the appellant that notwithstanding the act, by its express terms, includes 'publishers', it is not intended to apply to copyrighted books distributed by publishers, for the alleged reason that such type of books are not 'commodities' within the meaning of that term as used in the act; and that in any event, because it deals with contracts relating to 'commodities' in 'free and open competition with commodities of the same general class produced or distributed by others', one copy of a literary work cannot be in competition with another copy of the same book. The act defines 'commodity' as 'any subject of commerce'; and while the word 'commerce' in itself is a broad term, its ordinary meaning, as applied to trade, is the exchange of goods or property of any kind for money, or for other goods or property. Under such definition there can be no doubt that a book, as physical property, is an article adapted to commerce. However, the act goes further, and declares what type of contract fixing resale prices, between the producer (or publisher) and one buying for the purpose of resale, may be enforced as against either a party to the contract or a non-signatory thereto; and provides that the contract must relate to commodities in 'competition' with other like commodities. A book, then, to be subject to the provisions of the act, must be found to be in competition; but in competition with what? Competition implies a struggle for advantage between two or more forces, each possessing in substantially similar if not identical degree, certain characteristics essential to the content; and as used in political economy, is thus defined in Funk & Wagnalls' dictionary: 'An independent endeavor of two or more persons to obtain the business patronage of a third by offering more advantageous terms as an inducement to secure trade.'
Reverting for the moment to the reason for the enactment of fair trade legislation, it will be observed that it is designed to protect commodities subject to trade which, independent of their physical value, embody a trade-mark, brand or copyright, which is recognized by governmental agencies as a valuable property right vested by law in the inventor or author as a reward for genius. At common law a general restraint upon alienation is ordinarily invalid. 'The right of alienation is one of the essential incidents of a right of general property in movables, and restraints upon alienation have been generally regarded as obnoxious to public policy, which is best subserved by great freedom of traffic in such things as pass from hand to hand. General restraint in the alienation of articles, things, chattels except when a very special kind of property is involved, such as a slave or an heirloom, have been generally held void. 'If a man,' says Lord Coke, in 2 Coke on Littleton, § 360, 'be possessed * * * of a horse or of any other chattel, real or personal, and give or sell his whole interest or property therein, upon condition that the donee or vendee shall not alien the same, the same is void, because the whole interest and property is out of him, so as he hath no possibility of a reverter; and it is against trade and traffic and bargaining and contracting between man and man.'' Dr. Miles Med. Co. v. John D. Park & Sons Co., 220 U.S. 373, 404, 31 S.Ct. 376, 383, 55 L.Ed. 502. It should be borne in mind that the act is not designed to deal with the commodity qua commodity, but with a commodity identified by a copyright belonging to the publisher; and the essence of the statutory violation consists not in the bare disposition of the commodity, but in the forbidden use of the copyright in accomplishing such disposition. As stated by Mr. Justice Sutherland in Old Dearborn Distributing Co. v. Seagram-Distillers Corp., supra [299 U.S. 183, 57 S.Ct. 144, 81 L.Ed. 109, 106 A.L.R. 1476]: ...
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