Sunbeam Corp. v. Wentling

• Decision Date: 08 December 1950
• Docket Number: No. 10280.,10280.
• Citation: 185 F.2d 903
• Parties: SUNBEAM CORP. v. WENTLING.
• Court: U.S. Court of Appeals — Third Circuit

185 F.2d 903 (1950)

SUNBEAM CORP. v. WENTLING.

No. 10280.

United States Court of Appeals Third Circuit.

Argued November 10, 1950.

Filed December 8, 1950.

Rehearing Denied January 5, 1951.

Jefferson C. Barnhart, Harrisburg, Pa. (McNees, Wallace & Nurick, Harrisburg, Pa., on the brief), for appellant.

William H. Peace, 2d Philadelphia, Pa. (Ira Jewell Williams, Jr., Thomas Raeburn White, and Ira Jewell Williams, all of Philadelphia, Pa., Herman T. VanMell, Chicago, Ill., on the brief), for appellee.

Before MARIS, GOODRICH and HASTIE, Circuit Judges.

GOODRICH, Circuit Judge.

This appeal involves the application of the Pennsylvania Fair Trade Act.¹ The plaintiff, a manufacturer of electric shavers, complained of violation of the Act by the defendant, an individual retailer doing a mail order business from headquarters in Palmyra, Pennsylvania. The plaintiff claimed, and the defendant does not deny, that the defendant advertised and sold some of the plaintiff's razors at a price lower than the so-called fair trade price. The District Court granted relief in very broad terms.²

The defendant conducts a mail order business. He advertises merchandise in publications of national circulation³ and invites orders for the articles advertised. These articles he ships by mail or express to the buyers. What portion of the defendant's sales results in shipments to Pennsylvania buyers and what portion results in shipments to out-of-state buyers is not disclosed.

The defendant has signed no contract agreeing to maintain a minimum price on plaintiff's razors. But the plaintiff claims that it is entitled to relief under the nonsigner provision of the statute which states: "Wilfully and knowingly advertising, offering for sale, or selling any commodity at less than the price stipulated in any contract entered into pursuant to the provisions of section one of this act, whether the person so advertising, offering for sale, or selling is, or is not, a party to such contract, is unfair competition and is actionable at the suit of such vendor, buyer or purchaser of such commodity." 73 Purdon's Pa.Stat.Ann. § 8.

The case involves several points which we shall consider one at a time.

(1) The constitutionality of fair trade legislation under the United States Constitution and that of the Commonwealth of Pennsylvania with regard to due process and equal protection provisions.

This need not detain us long. Similar legislation was pronounced not violative of the federal Constitution in Old Dearborn Distributing Company v. Seagram-Distillers Corporation, 1936, 299 U.S. 183, 57 S.Ct. 139, 81 L.Ed. 109. The plaintiff suggests that the depression conditions which prompted that result in 1936 no longer obtain and if the case now came to the Supreme Court it would be decided the other way. Perhaps so; perhaps not. We think, however, the Supreme Court decision settled the constitutionality of the Fair Trade acts so far as due process and equal protection under the Fourteenth Amendment are concerned. We should and do follow it so long as it stands as a declaration of law by the Supreme Court.

Nor do we need to take long in holding the Pennsylvania statute free from attack on the due process or equal protection clauses of the Pennsylvania Constitution, P.S.Const. Art. I, §§ 1 and 9; Art. III, § 7. It is true that the Pennsylvania Supreme Court has not passed, in so many words, on the constitutionality of the Act under the Pennsylvania Constitution. But it has applied it, apparently without question of its constitutionality.⁴ A Common Pleas Court of Philadelphia has definitely declared it to be constitutional.⁵ And the overwhelming weight of decision in other state courts is to the same effect.⁶ Whatever may be the wisdom of this legislation we think it well established that legislatures, in enacting it, are not violating the provisions of the United States Constitution as to due process, or equal protection, or the state constitutional equivalents thereof.

(2) The Miller-Tydings Act. This statute⁷ was much discussed by both parties

at the argument. We think the statute was intended to relieve persons entering into contracts of the type provided for in these fair trade acts from liability under United States anti-trust laws.⁸ The legislation was necessary, if such immunity was to be had, because price maintenance agreements had previously been held to be a violation. Dr. Miles Medical Company v. John D. Park & Sons Company, 1911, 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (Sherman Act); FTC v. Beech-Nut Packing Co., 1922, 257 U.S. 441, 42 S.Ct. 150, 66 L.Ed. 307 (Federal Trade Commission Act). But the Miller-Tydings Act in no way, we think, affects any question of defendant's liability to plaintiff.

In this regard the case of Whitfield v. State of Ohio, 1936, 297 U.S. 431, 56 S.Ct. 532, 534, 80 L.Ed. 778 presents an interesting parallel. In the Hawes-Cooper Act, 49 U.S.C.A. § 60, Congress authorized the states to regulate the sale of prison-made goods even though manufactured in another state and sold within the state in the original package. Ohio had forbidden the sale of such goods in open market and defendant was convicted of violation of the statute. The information involved contained two counts, one based on a sale within Ohio, the other on a sale to an Ohio buyer from an Alabama seller. The Court stated⁹ that "A serious question as to the infringement of the commerce clause of the Constitution is presented by the second count * * *," but found it unnecessary to pass on this since the conviction was sustained by the first count which was valid because of the Hawes-Cooper Act. Thus, even though Congress had expressly left the field to state regulation, the Court intimated Congress either had not or could not authorize the states directly to regulate an interstate sale. The case is not controlling here, but is an indication that we should be wary of interpreting the Miller-Tydings Act as anything more of an authorization to the states than the words require.

(3) Application of the statute to interstate transactions.

Some at least of the defendant's business is interstate commerce. That point seems to us abundantly clear, but since the parties seemed to have some dispute about it we will stop on it for a moment. First, the purchase of advertising space in a publication published in another state and of national circulation is interstate commerce.¹⁰ Likewise, when defendant receives an order from outside Pennsylvania for an article which he fills by mailing it or sending it by express from Palmyra to a point in another state a transaction in interstate commerce has taken place. It is immaterial, so far as this point is concerned, whether "title" passes at the place of shipping or at destination.¹¹ The shipment would be equally an interstate matter if no passing of title were involved in the transaction. action. For instance, if A, in Pennsylvania, sends a Sunbeam Shavemaster to his friend in New York as a loan no passing of "title" is involved. But the shipment is certainly interstate commerce.

To state that defendant's business is interstate commerce does not answer the question of the applicability of a Fair Trade Act to such commerce. It is well settled that in the absence of an occupation of the field by Congress a state may regulate some aspects of interstate commerce.¹² But it is just as well settled that even in the absence of Congressional action the commerce clause is a limitation on the power of states to regulate interstate commerce. A state may not regulate the rates¹³ or length¹⁴ of trains even on the intrastate portion of an interstate journey; it may not prohibit the importation into the state of liquor from another state,¹⁵ nor prohibit its sale by one who purchased it from a seller in another state and while still in the original package;¹⁶ it cannot restrict the export or import of goods for the protection of local economic interests.¹⁷ As Professor Rottschaefer puts it, "One aim of the commerce clause was the protection of interstate trade against state interference. As a limit on state powers, it is a free trade charter for national commerce."¹⁸

As in so many Constitutional questions the line between permissible and prohibited state regulation is not a clear one. Chief Justice Stone, in Southern Pacific Co. v. State of Arizona, 1945, 325 U.S. 761, 770, 65 S.Ct. 1515, 1521, 89 L.Ed. 1915, voiced what is apparently the presently accepted approach.¹⁹ He said that "There has thus been left to the states wide scope for the regulation of matters of local state concern, even though it in some measure affects the commerce, provided it does not materially restrict the free flow of commerce across state lines, or interfere with it in matters with respect to which uniformity of regulation is of predominant national concern. * * * the matters for ultimate determination are * * * whether the relative weights of the state and national interests involved are such as to make inapplicable the rule, generally observed, that the free flow of interstate commerce and its freedom from local restraints in matters requiring uniformity of regulation are interests safe guarded by the commerce clause from state interference."

It is not difficult to put a case in which non-uniform state laws in this price regulation field will result in a complete block to trade between states in "fair traded" commodities. Here is one. There is no requirement that the established fair trade price be uniform throughout the states.²⁰ Thus, we have the possibility of a situation where, for instance, the fair trade price of an article has been fixed in Pennsylvania at $1 and in South Carolina at 75 cents. If the Pennsylvania statute is permitted to govern interstate sales, no sales in that commodity can be made by Pennsylvania sellers to South Carolina buyers. If the Pennsylvania seller were to meet the competition of South Carolina sellers, he would...