Texas Co. v. Di Gaetano

• Decision Date: 21 January 1963
• Docket Number: No. A--40,A--40
• Citation: 187 A.2d 721,39 N.J. 120
• Parties: The TEXAS COMPANY, a Delaware corporation, Plaintiff-Appellant, v. Marco DI GAETANO, t/a Marco's Service Station, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 120

39 N.J. 120

187 A.2d 721

The TEXAS COMPANY, a Delaware corporation, Plaintiff-Appellant, v. Marco DI GAETANO, t/a Marco's Service Station, Defendant-Respondent.

No. A--40.

Supreme Court of New Jersey.

Argued Nov. 19, 1962.

Decided Jan. 21, 1963.

Milton Handler, New York City, for appellant (Katzenbach, Gildea & Rudner, by Samuel Rudner, Trenton, attorneys; Amzy B. Steed, New York City, of counsel).

Walter J. Bilder, Newark, for respondent (Bilder, Bilder & Freeman, Newark, attorneys)

The opinion of the court was delivered by

JACOBS, J.

The Appellate Division set aside the Chancery Division's refusal to vacate a 1958 default judgment against the defendant and remanded the cause for further proceedings. 71 N.J.Super. 413, 177 A.2d 273 (1962). We granted certification on the plaintiff's application. 37 N.J. 225, 181 A.2d 10 (1962).

In 1956 The Texas Company adopted a resale price-fixing program pursuant to New Jersey's fair trade act. N.J.S.A. 56:4--3 et seq. It entered into an agreement with one of its retail gasoline dealers and gave notice thereof to its other retail dealers. The agreement fixed minimum retail selling prices for Texaco Fire Chief and Texaco Sky Chief gasoline and stipulated that the Company could, by notice, eliminate or add products and change their minimum prices. From time to time the minimum prices were changed and in a notice dated November 28, 1956 the Company advised its retail dealers that its minimum prices did not apply to sales 'to purchasers to whom delivery is made by tankwagon or truck transport into bulk storage facilities maintained by such purchasers.' In 1957 the Company advised the defendant that it had information that the defendant was selling Texaco gasoline below the minimum prices and it demanded that he terminate such conduct. The defendant failed to do so and the Company then filed a complaint in the Chancery Division seeking injunctive relief. After various steps outlined in the opinion of the Appellate Division (71 N.J.Super at pp. 419--421, 177 A.2d, at pp. 276--277), a default judgment was entered on January 20, 1958. The judgment permanently enjoined the defendant from selling the plaintiff's gasoline at less than the fixed minimum retail prices and from using the plaintiff's equipment or trademarks in connection with any such prohibited sales.

In 1960 the defendant moved to vacate the earlier default judgment. Affidavits accompanying his notice of motion set forth that in September 1958 the plaintiff had amended its fair trade agreement to provide that its minimum retail prices shall not apply to sales made by the retailer to employees of the Company or the retailer or to government agencies 'or to commercial or industrial concerns or institutional establishments.' The affidavits also set forth that the plaintiff was 'in actual competition' with its retail dealers, including the defendant, in that it was engaging in sales to and was soliciting purchases by various establishments which were purchasing gasoline for their own use as consumers rather than for resale. During argument on the motion to vacate, counsel for the defendant referred not only to the affidavits but also to a deposition by Mr. Heard, a sales engineer employed by the plaintiff. Mr. Heard had testified that 'commercial consumers' were not covered by the fair trade agreement and that sales to them were 'on a competitive basis.' He had also testified that in December 1957 he called upon one of the defendant's customers and offered to sell gasoline to him at 'a consumer tankwagon price' which was considerably below the minimum retail prices fixed by the fair trade agreement.

The plaintiff submitted no affidavits in opposition to the motion to vacate. Instead it relied largely on its legal contention that the issues were determined with finality by the judgment of January 20, 1958 and that nothing had been presented warranting relief under R.R. 4:62--2. See Hodgson v. Applegate, 31 N.J. 29, 155 A.2d 97 (1959). It acknowledged that the defendant's affidavits indicated that the plaintiff was selling to certain commercial consumer accounts but it pointed out that in the earlier stages of the proceeding it had affirmatively admitted that it 'does sell to commercial consumer accounts and solicits such accounts.' It noted that originally there had been reference to 5 commercial consumer accounts and that the defendant now referred to only 1 additional account. It contended that its September 1958 exemption of commercial accounts was legally valid and did not impair its right to enforce minimum resale prices covering retail sales to ordinary motorists.

Its position with respect to the precise meaning and scope of the exemption in favor of commercial accounts was rather obscure. At one point during the argument on the motion to vacate, Judge Kingfield asked counsel for the plaintiff whether a consumer with two trucks would be considered as a commercial account. In response, counsel stated that he was not speaking with any authority but believed that the judgment would in the first instance be that of the dealer who would have to determine whether it was 'profitable for him to consider this a wholesale or commercial consuming account.' Later, counsel supposed that one truck might be sufficient under certain circumstances, and still later expressed the view that the retailer could properly make a deal, dependent on the quantity being purchased, with the local 'factory or baker or trucker' for gasoline at a price below the minimum price fixed in the fair trade agreement. In this connection he remarked: 'We say now that that area is certainly not within fair trade as far as Texaco is concerned'; and he suggested that the sale could properly be made below the retailer's posted price but this suggestion was evidently made without reference to N.J.S. 56:6--2.1 et seq. See Fried v. Kervick, 34 N.J. 68, 167 A.2d 380 (1961).

In the Appellate Division, Judge Conford rejected the plaintiff's contention that in view of the 1958 judgment the defendant was now barred from raising the issues he seeks to present. Pointing out that the judgment was by default and stressing that the issues were not private in nature but involved matters of public concern, he concluded that the defendant had made a sufficient showing for relief under R.R. 4:62--2. 71 N.J.Super., at pp. 423, 429, 431, 177 A.2d, at pp. 278, 281, 282. See Mercoid Corp. v. Mid-Continent Invest. Co., 320 U.S. 661, 64 S.Ct. 268, 88 L.Ed. 376 (1944); Gulf Oil Corporation v. Mays, 401 Pa. 413, 164 A.2d 656 (Sup.Ct.1960); 109 U.Pa.L.Rev. 617 (1961). We agree and add that, in any event, the plaintiff's subsequent amendment of its fair trade agreement to exempt sales to commercial or industrial concerns or institutional establishments, presents an important issue which was in nowise determined or precluded by the earlier judgment. See Johnson & Johnson v. Weissbard, 11 N.J. 552, 555, 95 A.2d 403 (1953).

Judge Conford dealt comprehensively with the question of whether the plaintiff was barred by federal law from enforcing its minimum resale prices against the defendant, a retailer with whom it was engaged in competition, at least in some sense. He referred (1) to the breadth of the provision in the Miller-Tydings Amendment of the Sherman Act (15 U.S.C.A. § 1) and the McGuire Amendment of the Federal Trade Commission Act (15 U.S.C.A. § 45(a)) that the legalizing of fair trade minimum resale prices shall not make lawful any agreements fixing prices 'between persons, firms, or corporations in competition with each other'; (2) to the sweep of Chief Justice Warren's language in United States v. McKesson & Robbins, Inc., 351 U.S. 305, 312, 76 S.Ct. 937, 941, 100 L.Ed. 1209, 1216 (1956), and the Supreme Court's very strict approach to exceptions from the anti-trust laws (351 U.S. at p. 316, 76 S.Ct., at pp. 944, 945, 100 L.Ed., at p. 1218; see also Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035 (1951)); and (3) to Esso Standard Oil Co. v. Secatore's Inc., 246 F.2d 17 (1 Cir.), cert. denied, 355 U.S. 834, 78 S.Ct. 54, 2 L.Ed.2d 46 (1957), where the Court of Appeals for the First Circuit held that a gasoline producer could not enforce fair trade minimum resale prices against a retailer where the evidence showed that there was competition (beyond De minimis) between the producer and the retailer for so-called commercial accounts consisting mainly of operators of fleets of trucks or taxicabs.

In Secatore's the plaintiff had not exempted such accounts from its fair trade agreement but it contended, alternatively, that notwithstanding its competition with the retailer for such accounts it was entitled to have its minimum resale prices enforced with respect to retail sales to ordinary motorists. The Court of Appeals for the First Circuit rejected this contention in the light of the broad language in the Congressional provision and the very strict approach to anti-trust exceptions in McKesson & Robbins and Schwegmann. Several District Court cases have differentiated Secatore's on finding that there was an express exemption of so-called commercial accounts from the fair trade agreement (cf. General Electric Company v. Hess Brothers, Inc., 155 F.Supp. 57 (E.D.Pa.1957); Fiumara v. Texaco, Inc., 204 F.Supp. 544 (E.D.Pa.1962)), but Judge Conford found their differentiation to be impermissible in view of the strong reasoning and actual holding in Secatore's. 71 N.J.Super., at p. 428, 177 A.2d, at pp. 280, 281. See Bermingham, 'Legal Aspects of Petroleum Marketing Under Federal and California Laws,' 7 U.C.L.A.L.Rev. 161, 254--255 (1960); ¹ Note, 26 Geo.Wash.L.Rev 469, 473--474 (1958). Although we incline towards his persuasively stated position (71 N.J.Super., at pp. 424--428, 177 A.2d, at p. 278), we believe that further inquiry as to the history and meaning of the federal law need not be pursued here, since the...