Victor Fischel & Co. v. R. H. Macy & Co.

• Decision Date: 07 July 1967
• Citation: 282 N.Y.S.2d 234,229 N.E.2d 26,20 N.Y.2d 180
• Parties: , 229 N.E.2d 26 VICTOR FISCHEL & COMPANY, Inc., Respondent-Appellant, v. R. H. MACY & CO., Inc., Appellant-Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 234

282 N.Y.S.2d 234

20 N.Y.2d 180, 229 N.E.2d 26

VICTOR FISCHEL & COMPANY, Inc., Respondent-Appellant, v. R. H. MACY & CO., Inc., Appellant-Respondent.

Court of Appeals of New York.

July 7, 1967.

James W. Lamberton, Edwin L. Gasperini, Gerald E. Murray and Roger J. Weiss, New York City, for appellant-respondent.

Emanuel Becker, Lester H. Schreiber, John M. Schwartz and James R. Hawkin, II, New York City, for respondent-appellant.

Louis J. Lefkowitz, Atty. Gen. (Ruth Kessler Toch, John B. Cross and Karl E. Nisoff, Albany, of counsel), amicus curiae.

VAN VOORHIS, Judge.

Plaintiff is the exclusive distributor of Carstairs whiskey and Wolfschmidt vodka. The threshold problem in affirming the Feld-Crawford Act (General Business Law, Consol.Laws, c. 20, § 369--a et seq.) injunction prohibiting the retailing by defendant of these branded liquors at less than the prices fixed by the distriller (or its distributor) is that the injunction takes no account of the fundamental changes made in the pricing of liquor by the enactment of chapter 531 of the Laws of 1964. This act 'sought to end the discrimination by the liquor industry against the New York consumer which, as the (Moreland) commission had found, cost the New York consumer $150 million a year above that which a free market would have offered.' (Joseph E. Seagram & Sons v. Hostetter, 16 N.Y.2d 47, 55, 262 N.Y.S.2d 75, 79, 209 N.E.2d 701, 704). The Supreme Court took notice of the purpose of this act, in affirming its constitutionality, by stating (384 U.S. 35, 47--48, 86 S.Ct. 1254, 1262, 16 L.Ed.2d 336): 'The announced purpose of the legislature was to eliminate 'discrimination against and disadvantage of consumers' in the State. Frustrated by years of unhappy experience with a state-enforced mandatory resale price maintenance system that placed exclusive pricefixing power in the hands of the distillers, the legislature adopted § 9 as the core of the liquor price reform contemplated by Chapter 531. We cannot say that the legislature acted unconstitutionally when it determined that only by imposing the relatively drastic 'no higher than the lowest price' requirement of § 9 could the grip of the liquor distillers on New York liquor prices be loosened.'

In a footnote the Supreme Court, quoted relevant portions of the recital in section 8 of chapter 531, which stated the purpose of the enactment to be: "* * * In order to forestall possible monopolistic and anti-competitive practices designed to frustrate the elimination of * * * discrimination and disadvantage (to consumers), it is hereby further declared that the sale of liquor should be subjected to certain further restrictions, prohibitions and regulations, and the necessity for the enactment of the provisions of section nine of this act is, therefore, declared as a matter of legislative determination."

If this objective can be frustrated by Feld-Crawford injunctions, such as the one now under review, then the whole legislative process of eliminating the 'exclusive price-fixing power in the hands of the distillers' (Joseph E. Seagram & Sons v. Hostetter, 384 U.S., supra, p. 48, 86 S.Ct. at 1262) has been full of sound and fury, signifying nothing. The effect upon the Feld-Crawford Act of the change in our State alcoholic beverage price-fixing policy depends upon our State court decisions. On some 16 different applications, our various Special Terms considered that the Feld-Crawford Act would be affected in connection with liquor sales by whether the constitutionality of chapter 531 of the Laws of 1964 were to be sustained, as has subsequently occurred (Joseph E. Seagram & Sons v. Hostetter, 16 N.Y.2d 47, 262 N.Y.S.2d 75, 209 N.E.2d 701; 384 U.S. 35, 86 S.Ct. 1254). The question was considered by us in National Distillers & Chem. Corp. v. Seyopp Corp., 17 N.Y.2d 12, 267 N.Y.S.2d 193, 214 N.E.2d 361, but was not squarely confronted due to the circumstance that chapter 531 of the Laws of 1964 was held not to be 'self-operative', 'since subdivision 4 of section 101--b says plainly that such schedules are to be filed 'on a date to be fixed by the authority'. It is undisputed that the State Liquor Authority has never fixed such a date. It is the undisputed fact also that after we decided Seagram & Sons v. Hostetter, 16 N.Y.2d 47, 262 N.Y.S.2d 75, 209 N.E.2d 701, supra, a Justice of the United States Supreme Court granted a stay which is still in effect and which specifically restrains both the State Liquor Authority and the State Attorney-General from requiring compliance with section 101--b.' (17 N.Y.2d, supra, p. 16, 267 N.Y.S.2d 196, 214 N.E.2d 363).

The stay to which this animadversion was made in our majority opinion in the Seyopp case was, of course, vacated when our judgment upholding the constitutionality of chapter 531 of the Laws of 1964 was affirmed by the Supreme Court, and the schedules required by section 101--b of the Alcoholic Beverage Control Law, Consol.Laws, c. 3--B, to put that statute fully into effect have been filed. The issue comes before us now in a different posture from that in which it was presented to us by the Seyopp case in January, 1966. It must now be decided whether, as a matter of State public policy and statutory construction, the New York State 1964 liquor legislation had any effect upon the application of the Feld-Crawford Act to retail liquor sales. We consider that it did.

The inconsistency of an opposite position was noted in the opinion of the Supreme Court in the Seagram case. Although recognizing that it presented a State question, the Supreme Court may have concluded that the Seyopp case was decided without regard to the circumstance that no schedules had been filed under section 101--b and that, at the time when it was decided, this had been restrained by a stay issued by a Justice of that court. It was evidently argued to the Supreme Court, in Seagram that the Feld-Crawford Act would frustrate the price provisions of the 1964 legislation, and that this bore upon whether the act was constitutional. Concerning that the Supreme Court made this comment (384 U.S., supra, p. 50, 86 S.Ct. p. 1264, 16 L.Ed.2d 336): 'The legislature might reasonably have concluded that consumer prices would adequately reflect the reductions in prices to wholesalers and retailers accomplished by § 9, even though the state fair trade statute, which permits private resale price maintenance agreements on sales to consumers, appears to have emerged unscathed by the enactment of Chapter 531. 'A statute is not invalid under the Constitution because it might have gone farther than it did, or because it may not succeed in bringing about the result that it tends to produce.' Roschen v. Ward, 279 U.S. 337, 339, 49 S.Ct. 336, 73 L.Ed. 722.'

Reliance appears to have been placed upon the Seyopp case, which is cited by the Supreme Court in a footnote, for the conclusion that the Feld-Crawford Act might have emerged unscathed, at the hands of our court, by the enactment of chapter 531 of the Laws of 1964. This excerpt from the opinion by the Supreme Court indicates that the purpose of the pricing provisions of chapter 531 would be thwarted if retail prices could be kept up to the same levels by Feld-Crawford injunctions while the prices on sales to and by wholesalers were reduced, but that, even assuming such a construction to be placed by the New York courts on its own State legislation, it would not render chapter 531 of the Laws of 1964 invalid under the Federal Constitution. Indeed, it appears to have been assumed that, if chapter 531 were not to affect liquor sales at retail under the Feld-Crawford Act, such a limitation would soon be removed, by saying (384 U.S., supra, p. 51, 86 S.Ct. p. 1264) that "(T)he reform may take one step at a time", quoting from Williamson v. Lee Opt. Co., 348 U.S. 483, 489, 75 S.Ct. 461, 99 L.Ed. 563.

The Seyopp case, in reality, did not decide that this 1964 liquor legislation (once it had gone into full force and effect by the filing of brand prices with the State Liquor Authority) would be ineffectual to aid the consumer by reason of Feld-Crawford injunctions. It was said in General Elec. Co. v. R. H. Macy & Co., 199 Misc. 87, 92, 103 N.Y.S.2d 440, that, 'In the absence of statutory standards, they (the courts) have imposed equitable safeguards designed to ensure the functioning of the statute for the purposes expressed by the Legislature.'

Justice Shientag said in deciding Calvert Distillers Corp v. Nussbaum Liq. Store, 166 Misc. 342, 345, 2 N.Y.S.2d 320, 324: 'If equitable restrictions and safeguards may not be applied by the courts, then, instead of being a 'Fair Trade Act' the statute would become an act to permit unfair trade and business practices.'

No principle is better established than that a plaintiff should be denied an injunction where it lacks equitable standing to obtain affirmative equitable relief (e.g., De Candido v. Young Stars, 10 A.D.2d 922, 200 N.Y.S.2d 695). Manifestly the price provisions of chapter 531 of the Laws of 1964 were not enacted to enrich the wholesaler or retailer. If the 1964 legislation has any meaning in regard to retail prices, as we must assume that it does have, then the prices to be fixed by liquor injunctions against the retailer cannot be set at higher figures than those which would result in the normal course of business from the application of the price reduction provisions of that legislation. Plaintiff here has made no attempt to show what the effect of those provisions would be upon retailers such as defendant in the normal course of trade but, on the contrary, has sought to evade and escape from their effects in order, if possible, to nullify the legislation. The inequitable result of injunctive relief of that character would be to continue the frustration which the Supreme Court mentioned in the Seagram case, 384 U.S. at pages 47--48, 86 S.Ct. at page 1262 as resulting from 'years of...