W. A. Sheaffer Pen Co. v. Barrett

• Decision Date: 24 April 1950
• Docket Number: No. 37459,37459
• Parties: W. A. SHEAFFER PEN CO. v. BARRETT et al.
• Court: Mississippi Supreme Court

Page 838

45 So.2d 838

209 Miss. 1

W. A. SHEAFFER PEN CO. v. BARRETT et al.

No. 37459.

Supreme Court of Mississippi, in Banc.

April 24, 1950.

Henley, Jones & Woodliff, Jackson, for appellant.

Frank Mize, Forest, H. B. McCrory, Jr., Forest, for appellees.

McGEHEE, Chief Justice.

This is a suit wherein the complainant, W. A. Sheaffer Pen Company, sought a temporary injunction against the defendants, Ray Barrett and Ray Barrett Jewelers, Inc., which jewelry corporation is largely controlled by the individual defendant as owner of the majority of the capital stock thereof, to restrain them from selling the products of the complainant, such as fountain pens, automatic pencils, pen and pencil sets, and writing fluids at prices below those fixed thereon by the complainant, as the manufacturer of such products, in its trade contracts entered into with certain local retail dealers in conformity with the provisions of Section 1108, Code of 1942, known as the 'Fair Trade Act', permitting and upholding as lawful such trade contracts under the conditions prescribed by such Act.

On March 12, 1949 the trial court entered a decree denying the complainant's prayer and application for a temporary injunction on the grounds (1) that the said Fair Trade Act is unconstitutional, inimical to the public welfare, and violative of the public policy and fundamental rights of the people in that it is repugnant and hostile to the public interest in the right of free trade and legitimate competition in business; (2) that the Act is in direct conflict and repugnant to the Anti-Trust laws previously existing, and still existing in this state, and in such conflict therewith that both cannot consistently be enforced; (3) that the said Act, by its own terms, prescribes the procedure for its violation, and limits the complaint to an action at law for damages, thereby precluding the remedy by injunction.

The bill of complaint also asked for a permanent injunction upon final hearing. On April 25, 1949, the defendants filed a plea or answer in which there was embodied a demurrer challenging the constitutionality of the Act on the grounds,--(1) that the same is in violation of Article III, Section 14, Mississippi Constitution of 1890, as depriving the defendants of their property without due process of law; (2) that it violates Article III, Section 16 of the State Constitution, in that it impairs the obligation of contract and prevents the freedom thereof; (3) that it violates Article III, Section 5 of the Constitution, as being inimical to the public welfare and in violation of the public policy of the state; (4) that it violates Article IV, Section 33 of the Constitution, in that it provides for an unlawful and illegal delegation of authority for price fixing and price legislation by individuals for the sale of commodities; and (5) that it violates Article VII, Section 198 of the Constitution, which provides that the legislature shall enact laws to prevent all trusts, combines, contracts and agreements inimical to the public welfare.

The demurrer also raises the question as to whether or not the chancery court had jurisdiction of a suit for an injunction where the Fair Trade Act specifically provides for damages in a suit at law on behalf of any person who may be entitled to relief. The trial court thereupon sustained the demurrer, ordered the bill for injunction dismissed, and allowed this appeal by the complainant.

The Fair Trade Act, Section 1108, Code of 1942, provides, in substance, that it is lawful for the producer, manufacturer or owner of a commodity which bears, or the label or content of which bears, the trademark, brand, or name of the producer, manufacturer or owner of such commodity, and which is in fair and open competition in this state with commodities of the same general class produced by others, to contract with the retailer that he will not resell such commodity except at the prices stipulated by such vendor; that the vendee to whom such a product is sold may lawfully agree that he will not, in turn, resell it except at the price stipulated by such vendor. The Act further provides, however, that such commodity may be resold without reference to such agreement in the following cases.

'1. In closing out the owner's stock for the purpose of discontinuing delivering any such commodity.

'2. When the goods are damaged or deteriorated in quality, and notice is given to the public thereof.

'3. By an officer acting under the orders of any court.'

Furthermore the Act declares that:

'Willfully and knowingly advertising, offering for sale or selling any commodity at less than the price stipulated in any prior existing contract entered into pursuant to the provisions of Section 1 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.

'This Act shall not apply to any contract or agreement between producers or between wholesalers or between retailers as to sale or resale prices.'

The bill of complaint contains all of the essential averments to entitle the complainant to the benefit of the provisions of the said Act, and to the relief sought in the enforcement of its trade contracts, which are alleged to have been entered into between the complainant and certain retailers in the City of Jackson, other than the defendants, although neither of the defendants is a party to such contracts, provided the said Fair Trade Act is constitutional.

The averments of the bill of complaint also disclose that in such event the complainant would be entitled to injunctive relief against the defendants who were purchasing, from sources unknown to the complainant, and selling in violation of the trade contracts the commodities produced by the complainant as aforesaid, on the ground that an action at law for damages would not...