Seagram Distillers Co. v. Corenswet

Decision Date02 August 1955
Citation2 McCanless 644,281 S.W.2d 657,198 Tenn. 644
Parties, 198 Tenn. 644 SEAGRAM DISTILLERS COMPANY v. Harry E. CORENSWET, d/b/a Favorite Liquor Store, et al.
CourtTennessee Supreme Court

Elkin Garfinkle and H. Frank Taylor, Nashville, for appellants.

Sam P. Walker, Memphis, Val Sanford, Nashville, for appellee.

NEIL, Chief Justice.

This case involves a construction of the Fair Trade Law of Tennessee, Sections 6770.1 through 6770.5 of the 1950 Supplement to the Code.

The Seagram Distillers Company filed its original bill in the Chancery Court seeking an injunction against the defendants to restrain them from selling its trade-name products below established prices. In its bill Seagram alleged that it is a Delaware Corporation, which does no business in Tennessee, except in interstate commerce; that it is the owner of certain trademarks, trade-mames and brand names, which are displayed on the containers of its products; that these products are sold in fair and open competition with similar commodities of the same general class produced and sold by numerous other distillers in the State of Tennessee; that it has entered into fair trade agreements with numerous retailers in the State of Tennessee, a specimen copy of which was made Exhibit A to the bill; that the appellants were given notice of the prices established under these agreements; but that the appellants refused to abide by such prices, and sold Seagram's products below the established prices in violation of the Fair Trade Law to the great damage of Seagram.

To this bill the appellants filed a demurrer on the following grounds:

'There is no equity on the face of the bill for the following reasons:

'(a) The complainant is not a producer making a sale or a vendee making a re-sale nor is the complainant a vendor selling to a vendee under a contract to re-sell a commodity at a stipulated price; wherefore the complainant does not come within the provisions of the statute known as the Fair Trade Act and has no standing in Court.

'(b) The contract set out in the bill as an exhibit is without consideration and is not binding on anyone.

'(c) The complainant is a foreign corporation not licensed to do business in the State of Tennessee and has no standing in Court to prosecute this action.'

The Special Chancellor overruled the demurrer and granted the defendants a discretionary appeal, continuing the injunction in force pending the appeal.

The assignments of error complain that the Chancellor should have sustained each of the three grounds of the demurrer referred to herein and dismissed the bill.

We will continue in this opinion to refer to the parties as they appeared in the trial court.

The Special Chancellor expressed the view that the questions presented by the demurrer 'are controlled by the holding of the Supreme Court in the case of Frankfort Distillers Corp. v. Liberto, 190 Tenn. 478 [230 S.W.2d 971]'; and accordingly overruled the demurrer.

A copy of the contract between the complainant and defendants is made an exhibit to the bill, and is admittedly a true copy of the original contract. This contract refers to the complainant as the 'Owner' and distributor of certain alcoholic beverages 'which bear the trademarks, brands, and/or name of the Owner and producer thereof'. The 'Owner', who is the complainant in this cause, claims the right under our Fair Trade Act to fix the minimum price of its commodities in order to protect its trademark, and also to protect retail sellers thereof from 'cut-throat' competition.

The bill charges that complainant had set a price for its trademark products by entering into Fair Trade contracts with certain authorized retail dealers in Nashville, Davidson County, Tennessee, and notified all such retail dealers, including the defendants, of prices so fixed, but the defendants failed to abide by the price and were 'engaged in price cutting and in unfair competition' in violation of the complainant's rights.

In construing our Fair Trade Act, we must consider the fact that it was not intended to govern fixing the price of intoxicating liquors alone, but applies to all 'trademark' commodities that are the subject of lawful commerce in this State.

The defendants contend that the Frankfort Distillers Corporation case, supra, is not applicable to the first and second grounds of the demurrer, because the questions were not involved or considered by the Court in that case.

The defendants by their demurrer admit that Seagram is the 'Owner' of trademarked goods which they are now selling, or offering for sale, below the established prices. They contend however that 'the complainant is not a producer making a sale, or vendee making a re-sale' under contract to sell at a stipulated price, and hence the said complainants do not come within the provisions of the Fair Trade Act.

Before giving consideration to the first and second assignments of error, we dismiss the third assignment complaining that the 'complainant is a foreign corporation, not licensed to do business in Tennessee and hence has no standing in Court to prosecute this action.' It is wholly without merit. In Phillips v. Johns-Manville Sales Corp., 183 Tenn. 266, 191 S.W.2d 554, 555, this Court said:

'We are aware of no rule denying to a foreign corporation the authority to enforce or defend its rights in the courts of this state, except where there has been a failure to comply with our statutes applicable whenever a foreign corporation is 'doing business' in this state.'

The complainant, Seagram Distillers Company, is not doing any intrastate business, and its right to prosecute this action is sustained. The case of United Artists Corp. v. Board of Censors, 189 Tenn. 397, 225 S.W.2d 550, relied on by defendants, has no application here. The assignment of error is overruled.

Coming now to the merits of the first and second grounds of the demurrer, contention is made that they should have been sustained because (1) 'complainant is not a vendor contracting with his vendee', and (2) under the Liquor Laws of Tennessee and the Regulations issued by the Commissioner of Finance and Taxation no such agreement can be entered into. This latter contention is without merit because in our opinion the 'Liquor Laws' of this State have no bearing upon any issue involved in this case. It was expressly held in the majority opinion in the Frankfort Distillers case, supra [190 Tenn. 478, 230 S.W.2d 974], as follows: 'We do not think that the legality of the sale of liquor in Tennessee has anything to do with the application of the Fair Trade Act when properly construed.' It is furthermore pointed out in the opinion that the sale and distribution of liquor does not place intoxicating liquors in a classification peculiar to themselves in so far as property rights are concerned; 'but so far as property rights are concerned, where liquor is legally dealt with, there is no difference in it and any other lawful commodity.' (Citing authorities.)

Adverting to the first contention that the complainant is 'not a vendor contracting with a vendee' etc., this same question was raised in Frankfort Distillers Corp. v. Liberto, supra, wherein the retailer insisted the Act should not be applied 'because they have never executed Fair Trade agreements'. To this argument the Court responded as follows (Prewitt, J., speaking for the majority):

'In Old Dearborn...

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