Union Carbide & Carbon Corp. v. White River Distributors, Inc.

118 F. Supp. 541, 1954 U.S. Dist. LEXIS 4536
CourtDistrict Court, E.D. Arkansas
DecidedFebruary 8, 1954
DocketB-237
StatusPublished
Cited by13 cases

This text of 118 F. Supp. 541 (Union Carbide & Carbon Corp. v. White River Distributors, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Union Carbide & Carbon Corp. v. White River Distributors, Inc., 118 F. Supp. 541, 1954 U.S. Dist. LEXIS 4536 (E.D. Ark. 1954).

Opinion

LEMLEY, District Judge.

This cause comes on for final hearing before the Court, and is submitted upon the pleadings, oral testimony taken before the Court, including testimony taken in connection with plaintiff’s motion for a preliminary injunction, documentary evidence, and written briefs.

Plaintiff, a New York corporation, has brought this action against the defendant, an Arkansas corporation, to restrain the latter from selling the well known automobile anti-freeze solution, “Pres-tone”, which is manufactured by the plaintiff, at retail prices less than those prescribed by a so-called “fair trade” agreement executed on September 17, 1952, by 555 Incorporated, one of the *544 plaintiff’s wholesale distributors, and Basil E. Butler’s Esso Service, a retail dealer, both of Little Rock. By an amendment to its complaint the plaintiff further seeks a declaratory judgment to the effect that the defendant is bound by said agreement, and may not sell Prestone below the prescribed prices. Jurisdiction of this Court is predicated upon diversity of citizenship, the requisite jurisdictional amount being present; and the plaintiff’s claim is based upon Section 6 of the Arkansas Fair Trade Act. 1

It is alleged in the complaint that the plaintiff is engaged in the manufacture, sale and distribution throughout the United States and in the State of Arkansas of an anti-freeze product or commodity contained in a metal container, which bears the “distinctive registered trade-mark ‘Presione’ ”; that for many years said trade-mark has been duly registered in the Patent Office, and that plaintiff is the sole owner thereof; that said product has been and still is in fair and open competition in Arkansas with similar products produced and distributed by others; and that the plaintiff has expended large sums of money in advertising and promoting the sale of said products and has established a valuable reputation and good will for its trademark. Plaintiff next alleges the execution of the “fair trade” agreement between 555 Incorporated and Butler’s Es-so Service; a copy of this agreement is attached as an exhibit to the complaint, and it appears therefrom that the retailer agreed with the distributor that the former would not re-sell Prestone at less than certain prices, subject to certain exceptions which will presently be mentioned. The prescribed re-sale prices were as follows: $3.75 per gallon in gallon cans; $4 per gallon in quart cans; and $1.00 per quart can. The contract provided that these prices should not apply to sales “made to Government agencies or to consumers buying for industrial or fleet use, or to sales made by Union Carbide and Carbon Corporation or its subsidiary companies or by distributors or dealers to their employees”; further exceptions were made with respect to cases in which the retailer was closing out his stock in good faith and for the purpose of discontinuing handling the product, and with respect to cases in which the goods were damaged or deteriorated in quality and notice of that fact was given to the public.

Plaintiff further alleges that after the execution of said agreement notices of its existence and of the prescribed retail prices were issued to the trade, and that in 1952 and 1953 the defendant received such notices, but that in spite of such notice it sold Prestone at retail at prices substantially less than those above mentioned. It is not contended by the plaintiff’ that the defendant has ever executed a “fair trade” agreement with it or with any of its distributors. It is the contention of the plaintiff that by virtue of the “non-signer” provisions of Section 6 of Act 92 of 1937, all retailers of Prestone in Arkansas are required to sell the product at the prices prescribed by the agreement between the distributor and the one retailer above mentioned. The full text of Section 6 will be hereinafter set forth.

Plaintiff next alleges that the defendant’s sales of Prestone below the prescribed prices are causing and will continue to cause the plaintiff to suffer irreparable damage to its property rights, and that unless defendant is enjoined, plaintiff’s entire price structure, particularly in Arkansas, will be jeopardized and plaintiff’s business irreparably damaged and its good will and property rights in its trade-mark irreparably harmed. It is further alleged that plaintiff has no adequate remedy at law, and that the defendant should be temporarily and permanently enjoined from selling Prestone at less than the prescribed prices; as stated, plaintiff also seeks declaratory relief.

In its original answer the defendant admitted that the plaintiff is the owner *545 of the trade-mark “Prestone”; admitted that plaintiff manufactures, distributes and sells its product under said trademark in fair and open competition with similar products sold by others; admitted the execution of the “fair trade” agreement mentioned in the complaint, and that it had received notice thereof; and admitted that it had sold Prestone below the prices prescribed in said agreement. It alleged, however, that the plaintiff itself, acting through the CrowBurlingame Company, one of its agents in Arkansas, had sold Prestone at retail at prices below those prescribed in the agreement, which action, defendant contends, amounted to a waiver and estoppel; it was further alleged that an enforceable contract is a prerequisite to the operation of the Arkansas statute, and that the exception in the agreement relied upon by the plaintiff in favor of sales to consumers “for industrial or fleet use” is so vague and indefinite as to render the contract unenforceable. It was further alleged that said exception was not authorized by the statute, and that its inclusion in the agreement was a deviation from the statute and rendered the contract void.

In addition to these allegations, the defendant, in its original answer and in two amendments thereto, alleged that Section 6 of the Act 2 , as applied to the defendant, a non-signer, was violative of the due process clause of the 14th Amendment to the Constitution of the United States and of several provisions of the Constitution of the State of Arkansas 3 ; and it was further alleged that the entire Act was invalid at the time it was passed as being in conflict with the Sherman Anti-Trust Act 4 and with the commerce clause of the Constitution of the United States, art. 1, § 8, cl. 3, and that since it had never been re-enacted, its initial invalidity had not been cured by the passage of the Miller-Tydings Act, Act of August 17, 1937, c. 690, Title VIII, 50 Stat. 693, 15 U.S.C.A. § 1, or the McGuire Act, Act of July 14, 1952, c. 745, Sec. 2, 66 Stat. 632, 15 U.S.C.A. § 45.

The facts in the case are not in serious dispute, and are in substance as follows:

The plaintiff is the manufacturer of Prestone, as has been said, which it markets at wholesale in Arkansas and elsewhere through distributors or consignees. The defendant is engaged in the retail hardware business at Batesville, Arkansas, and during 1952 and 1953 it acquired a quantity of Prestone and has been retailing it in sealed cans at prices less than the prescribed “fair trade” prices.

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Bluebook (online)
118 F. Supp. 541, 1954 U.S. Dist. LEXIS 4536, Counsel Stack Legal Research, https://law.counselstack.com/opinion/union-carbide-carbon-corp-v-white-river-distributors-inc-ared-1954.