Sperry & Hutchinson Co. v. Temple

• Citation: 137 F. 992
• Decision Date: 16 May 1905
• Docket Number: 2,019.
• Parties: SPERRY & HUTCHINSON CO. v. TEMPLE.
• Court: U.S. District Court — District of Massachusetts

137 F. 992

SPERRY & HUTCHINSON CO. v. TEMPLE.

No. 2,019.

United States Circuit Court, D. Massachusetts.

May 16, 1905

Final Decree, June 24, 1905.

Alder &amp Hall and W. Benton Crisp, for complainant.

John A Coulthurst and John F. Hurley, for defendant.

PUTNAM Circuit Judge (orally).

This case has been submitted on bill, answer, replication, and proofs, and fully argued by counsel, and the court sees no reason why judgment should be reserved. The court need not inquire whether the complainant was the originator of the general system of dealing in trading stamps described in the bill, but it puts out the stamps to merchants under special contracts with them. The nature of the business requires that there should be a certain monopoly. If the stamps were on the market generally, thus opening the business extensively, no merchant would have any inducement to deal with the complainant. Therefore, by the very nature of the business the stamps are not intended to be dealt with by the public generally, and are not transferable in the general and ordinary sense of the word. From the inevitable and necessary course of business there must be certain restrictions on dealings in the stamps. This case does not involve innocent parties who purchased stamps in ignorance of the necessities of the course of business. Some of the stamps are said to have had imprinted on them a notice, or words which in substance were a notice, with regard to the necessary course of business, showing that the stamps were not to be dealt with generally, or that they were not generally transferable. While the fact that the stamps dealt in by the respondent contained no such notice would, perhaps, bar the complainant as to a purchaser obtaining them innocently, yet this respondent was in the employment of the complainant long enough to know what the necessities of the course of business were. This was sufficient knowledge, regardless of the question whether he knew that there were specific limitations in the books which were given out by the complainant as an element in the use of the stamps. Therefore he does not stand altogether in the position of an innocent party.

Objections have been made that the system of dealing in trading stamps in contrary to public policy, and that certain representations made that the stamps are without cost to the purchaser are untrue and inequitable, and therefore bar the complainant from coming into the chancery court. These statements were, however, substantially true, provided the business was carried on honestly. The trading stamp business is essentially legitimate, and, so far as the court can discover, it is the only way in which the small purchaser practically obtains a discount for immediate payment, whether that immediate payment is in cash or anything else. Honestly conducted, it leads to an allowance to one who purchases for cash, or the equivalent thereof; and statements of the character referred to are not in their proper sense untrue. Undoubtedly, the way in which the business is done, requiring the stamps to be redeemed in articles of merchandise, mainly articles of furniture, leads to certain impressions on the part of the public which induce the public to take the trading stamps when otherwise they would not take them. That, however, is not distinguishable from many usual methods adopted by merchants for inducing custom, and it is one of those methods of so inducing custom which courts cannot interfere with, unless they are disposed to protect the public beyond what the law permits. So far as this case is concerned, the court is unable to perceive from any proofs in the record, or from any suggestion, that the business of the complainant is not perfectly legitimate, honestly carried on, and, therefore, a business which the courts ought to protect, and one which the Legislature has no right to obstruct.

As already said, the stamps issued by the complainant go into the hands of merchants who deal directly with it; and, unless protected in some way against unauthorized competition arising from the stamps being resold to the public by other merchants, the whole system would break down and the business of the complainant would be destroyed. Therefore, so far as necessary, and so far as within the reason of the law, the court ought to...