Union Underwear Co. v. Aide

• Decision Date: 14 November 1967
• Docket Number: No. 12661,12661
• Citation: 151 W.Va. 918,159 S.E.2d 217
• Court: West Virginia Supreme Court
• Parties: UNION UNDERWEAR CO., Inc., a Corp. v. Ferris A. AIDE, d/b/a Aide's Discount Store.

Page 217

159 S.E.2d 217

151 W.Va. 918

UNION UNDERWEAR CO., Inc., a Corp. v. Ferris A. AIDE, d/b/a Aide's Discount Store.

No. 12661.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 13, 1967.

Decided Nov. 14, 1967.

Syllabus by the Court

1. Chapter 123, Acts of the Legislature, Regular Session, 1937, now designated as Chapter 47, Article 11 of the West Virginia Code, as amended, and commonly referred

to as the 'Fair Trade Act', with the exception of Section 6 thereof, does not contravene any constitutional or statutory provisions of this state or of the United States and is constitutional and valid.

2. While any rights arising under a contract authorized by the provisions of Code, 47--11, as amended, may be enforced against a signatory party in the courts of this state, an injunction which permanently enjoins a party to such a contract from thereafter acting contrary to the terms of the contract, even though the contract has been terminated, is unduly restrictive and will not be upheld on appeal.

Pat R. Hamilton, Oak Hill, for appellant.

Jackson, Kelly, Holt & O'Farrell, F. Paul Chambers, James K. Brown, Charleston, Mahan, Higgins, Thrift & Graney, Patrick C. Graney, Jr., Fayetteville, Weil, Gotshal & Manges, Gabriel Kaslow, New York City, for appellee.

BROWNING, Judge.

Appellee, Union Underwear Company, Inc., hereinafter referred to as plaintiff, instituted this action in the Circuit Court of Fayette County praying that the appellant, Ferris Aide, d/b/a Aide's Discount Store, hereinafter referred to as defendant, be permanently enjoined from advertising, offering for sale or selling at retail any products manufactured and sold by plaintiff under its Fruit of the Loom trademark at prices less than the fair trade prices stipulated by plaintiff. The complaint alleges that defendant entered into a contract with plaintiff to sell its Fruit of the Loom products at retail prices stipulated by plaintiff but, notwithstanding such contract, on July 29, and August 5, 1965, advertised and sold Fruit of the Loom products at less than the stipulated retail prices. The contract, attached as Exhibit A to the complaint, provides in part as follows:

'* * * we hereby agree that we shall sell your Fruit of the Loom products only at retail in accordance with the provisions of this agreement.

'We hereby agree not to advertise, sell, or offer for sale, your Fruit of the Loom products, directly or indirectly, in any State where agreements of this character are lawful:

'1. At less than the minimum retail prices listed on Schedule A attached hereto, * * *

2. At less than the minimum retail prices fixed from time to time by notice mailed by you, * * *

'If we at any time decide to discontinue the sale at retail of your Fruit of the Loom products, or decide to sell your said products at other than retail, or at other than the minimum retail prices established by you, we will notify you in writing immediately of such fact and offer in such writing to sell and deliver to your mill at your invoice prices all your Fruit of the Loom products which we then have on hand. You agree upon receipt of such notice that you will repurchase the same and promptly furnish us with shipping instructions.'

Defendant answered admitting the sales as alleged but contended that such contract was void because: the so-called fair trade act of West Virginia had been declared unconstitutional; such contract was in effect price fixing and contrary to public policy; the contract purports to be an agreement in perpetuity and against public policy; and such contract contemplates only Fruit of the Loom products purchased from plaintiff and does not govern the sale of Fruit of the Loom products purchased elsewhere. The defendant also moved to dismiss the complaint on much the same grounds, which motion was overruled by the court. Defendant then moved to file an amended answer which alleged that since the inception of the action defendant had terminated his contract with plaintiff and there is therefore no basis for injunctive relief, appending as an exhibit thereto a letter from the defendant to plaintiff dated February 28, 1966, as follows:

'Please be advised that the 'Fair Trade Agreement' executed by the undersigned under date of July 11, 1963, is hereby terminated.

'Please be further advised that I presently have on hand no FRUIT OF THE LOOM products for return.'

Plaintiff objected to the filing of the amended answer and moved to strike the same as failing to allege any sufficient defense which motion the court sustained and entered its order to the following effect:

'That the Defendant, Ferris A. Aide, his agents and employees, be and they hereby are until further order of this court, jointly and severally, ENJOINED, RESTRAINED, and INHIBITED from advertising for sale, offering for sale, or selling, directly or indirectly, any product or products manufactured or distributed by the Plaintiff, Union Underwear Co., Inc., bearing the trade-mark, brand or name 'Fruit of the Loom', at less than the minimum retail prices specified by the Plaintiff, Union Underwear Co., Inc., from time to time, as provided by said contract of July 11, 1963, plus the amount of all sales and excise taxes, except as provided in said contract and the Fair Trade Act of the State of West Virginia;'

The discovery deposition of Aide, reflecting his intention to obtain Fruit of the Loom products from whatever sources he can and sell them at prices less than those specified by plaintiff, appears in the record, apparently filed by plaintiff in support of its motion to strike the amended answer.

The threshold question to be determined is whether, as contended by defendant, this Court has heretofore passed upon and held unconstitutional Chapter 123, Acts of the Legislature, 1937, Regular Session, the 'Fair Trade Act', now contained in Code, 47--11, as amended, and hereinafter referred to as the Act'. Contrary to defendant's contention, plaintiff argues that this Court has passed upon and held invalid only Section 6 of the Act. Paradoxically, counsel for both the plaintiff and the defendant rely for their respective positions upon the comparatively recent decision of this Court in General Electric Company v. A. Dandy Appliance Co., 143 W.Va. 491, 103 S.E.2d 310, hereinafter referred to as the Dandy case or Dandy.

The Dandy case was certified to this Court by the Circuit Court of Kanawha County on its own motion, each of the certified questions being predicated upon the fact that the Act was not applicable to the defendant Dandy inasmuch as he was not a party to any contract fixing minimum resale prices as provided by Section 2 of the Act. Incidentally, it might be observed at this point that there was no reference to Section 2 of the Act from the beginning to the end of the Court's opinion in the Dandy case or in the syllabus thereof. These are the four questions certified to this Court:

'(1) Is or is not The provision of the West Virginia 'Fair Trade Act' (Acts of the Legislature, 1937, Regular Session, Ch. 123; W.Va.Code, as amended, Ch. 47, Article 11, Sec. 6), which requires the defendant to maintain certain minimum retail resale prices, * * * a proper exercise of the police power of the State of West Virginia?

'(2) Is or is not The provision of the West Virginia 'Fair Trade Act', (Acts of 1937, Ch. 123; W.Va.Code, as amended, Ch. 47, Art. 11, Sec. 6), which requires the defendant to maintain certain minimum retail resale prices for appliances, Even though the defendant did not enter into any contract with the plaintiff providing for such minimum retail resale prices, an invasion of the property rights of this defendant without due process of law?

'(3) Is or is not the West Virginia 'Fair Trade Act', (Acts of 1937, Ch. 123, Code, as amended, Ch. 47, Art. 11, Sec. 6), void and on no legal effect because enacted in 1937, contrary to a Federal Statute known as the Sherman Anti-Trust Act?

'(4) Does or does not Section 6 of the West Virginia 'Fair Trade Act', (Acts of 1937, Ch. 123; W.Va.Code, as amended, Ch. 47, Art. 11, Sec. 6), In so far as it relates to rights against non-signers, embrace an object not expressed in the title of said Act so as to be rendered void as violative of Section 30, Article VI of the Constitution of the State of West Virginia?' (Italics supplied.)

In the paragraph preceding the stating of the four questions the court said:

'The Circuit Court overruled the defendant's demurrer as to its first three grounds and sustained it on the fourth ground, holding that the Fair Trade Act is void because it violates Section 30, Article VI of the Constitution of West Virginia, in that the title to the act is not sufficient to express its purpose of bringing within its scope a Non-signer of Fair Trade agreements; and the Court certified to this Court the following questions, which though substantially are the same as those specified in the demurrer, are exactly and expressly these:' (Italics supplied.)

The following is a paragraph from the court's opinion which immediately precedes the last quoted paragraph:

'Section 6 of Chapter 123, Acts of the Legislature, 1937, Regular Session, reads as follows:

"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 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 any person damaged thereby.'

'We consider it unnecessary, in view of the recital of the issues, to quote the other sections of the statute.' (Italics supplied.)

All of the language of the Court's opinion in Dandy will not, for obvious reasons, be restated herein to confirm what we believe is apparent, that is, that the Court in Dandy was passing only upon the question of the validity of Section 6, The non-signer provision of...