Union Underwear Co. v. Aide

159 S.E.2d 217, 151 W. Va. 918, 1967 W. Va. LEXIS 137, 1968 Trade Cas. (CCH) 72,378

• Court: West Virginia Supreme Court
• Decided: November 14, 1967
• Docket: 12661
• Status: Published

Opinions

BROWhing, 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 pro- ' ducts, 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 re-purchase 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. 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 snch 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 of 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 the Act. We believe the following statement in the opinion to be conclusive in that regard:

“Though it is of great advantage to the plaintiff to have additional protection in the provision making it unlawful to sell trademark or brand articles below the prices fixed by the manufacturer, nevertheless the manufacturer or distributor is not deprived of his rights to make reasonable contracts with others in regard to the price at which such merchandise shall be sold, and he can protect himself by suits for enforcement or damages. To extend such manufacturer’s or distributor’s rights to the public generally is but another improper exercise of the police power and not in our opinion warranted, and being such is void, as in violation of Section 10 of Article III of the Constitution of West Virginia, which provides that:

“ ‘No person shall he deprived of life, liberty, or property, without due process of law, and the judgment of his peers.’ ” (Italics supplied.)

The language “to the public generally” obviously referred to that portion of the Act, namely, Section 6, which applied to non-signers of such contracts. The Court elearly stated in the above quoted paragraph that a manufacturer or distributor is not to be deprived of his rights to “make reasonable contracts with others in regard to the price at which such merchandise shall be sold, and he can protect himself by suits for enforcement or damages.” This is the next to the last paragraph of the opinion: “The title to the Fair Trade Act so enacted by the Legislature does not sufficiently indicate that non-signers of contracts for the sale of merchandise at prices fixed by the manufacturers or distributors are included within its terms and the words ‘to protect . . . the general public against injurious and uneconomic practices in the distribution of competitive commodities. . .’ do not in our opinion apprise the public that they may become pecuniarily liable for a violation of its provisions as specified in Section 6 of the Act.” (Italics supplied.) It is the view of the Court as presently constituted that the last paragraph of the Dandy opinion stating that “. . . we are of the opinion to, and so hold, that the so-called ‘Fair Trade Act’, Chapter 123, Acts of the Legislature, 1937, Regular Session, is not a proper exercise of the police power and is unconstitutional and void as violating the due process of law provisions, and as not containing a title sufficiently expressing its purpose, as required by the Constitution of West Virginia.” must be read in the light of the next to the last paragraph, above quoted, as well as the other statements contained in the Court’s opinion.

Up to this point there has been no reference to the syllabns of the Dandy case. A careful reading of all of the decisions of this Court upon the question of whether the syllabus or the statements contained in the body of the opinion are controlling as to the law of the case convinces the writer, at least, that there is considerable confusion with regard to that matter. Apparently the last case decided by this Court in which that question was discussed is State v. Franklin, 139 W. Va. 43, 79 S. E. 2d 692. This is the fifth point of the syllabns of that case: “Point 2, Syllabns, State v. Collins, 108 W. Va. 98, read in the light of the opinion and the facts therein and explained.” Perhaps it would serve no good purpose for reasons hereinafter stated to discuss that question at length but it might be well to cite the cases and the articles thereon in the West Virginia Law Quarterly. State v. Collins, 108 W. Va. 98, 150 S. E. 369; Koblegard et al., Trustees v. Hale, 60 W. Va. 37, 53 S. E. 793, 116 Am. St. Rep. 868, 9 Ann. Cas. 732; Koonce v. Doolittle, 48 W. Va. 592, 597, 37 S. E. 644; “THE LAW — IN WEST VIRGINIA ”, by Thomas P. Hardman, Dean of the College of Law of West Virginia University, 47 W. Va. L.Q. 23. See also, 47 W. Va. L.Q. 141; 47 W. Va. L.Q. 209; 48 W. Va. L.Q. 55; 58 W. Va. L.Q. 263, and cases cited therein. But whatever the proper effect of the syllabns may be, the Court is of the view that there is no conflict in Dandy between the syllabns and 'the controlling language of the opinion and that by reading them together it is obvious that the Court passed only upon the narrow issue of the validity of Section 6 of the Act and did not attempt to, nor did it, strike down the act in toto.

This is the first syllabns point of the Dandy case: “The Pair Trade Act, as contained in Chapter 123, Acts of the Legislature, 1937, Regular Session, which provides that the sale of trade-marked items at a price less than that stipulated is a violation of the Act ivhether the seller is a party to the stipulated price contract or not, is unconstitutional and void as an arbitrary and unreasonable exercise of tbe police power becanse of having no substantial relation to the public health, safety or general welfare.” (Italics supplied.) If there were no second syllabus point in the case, and if the syllabus controls rather than the facts and statements contained in the body of the opinion, or if Dcmcly had not been a certified case with the limitations as to what the Court may rule upon in such a case, the first syllabus point conceivably might be construed as contended for by the defendant and the entire Act held invalidated by the Dandy decision. However it is obvious that this language in the first syllabus point, “whether the seller is a party to the stipulated price contract or not”, while not as precise as it could have been, obviously referred to Section 6, since the language contained in that syllabus point is almost identical with the language contained in Section 6. The second and only other syllabus point of Dandy is explanatory of the first syllabus point and clearly denotes that the Dandy decision dealt with and struck down only Section 6 of the Act. Syllabus Point 2 is as follows: ‘ ‘ Section 6 of Chapter 123 of the Acts of the Legislature, 1937, Regular Session (Code 47-11-6) providing that any person ‘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’, embraces a matter not stated in the title of said Act, nor germane to the matter stated in the title, and is therefore, unconstitutional and void, because violative of Section 30, Article VI of the Constitution of West Virginia, which provides that no legislative act ‘ shall embrace more than one object, and that shall be expressed in the title.’ ” Certain it is that there is no restriction upon the reading together of the points of the syllabus of a case regardless of the view that might be held as to whether the syllabus or the body of the opinion is controlling as to the law of the case. Over and above all that has heretofore been said as to the extent of the decision of this Court in Dandy is the well settled rule from which this Court has never deviated applicable to cases that come here upon certificate. The author of the Dandy opinion stated the applicable law succinctly and well: “This Court should consider only such questions as have been decided by the trial court and by it certified here. Means v. Kidd, 136 W. Va. 514, 67 S. E. 2d 740.” To the same effect are: Leishman v. Bird, 147 W. Va. 525, 129 S. E. 2d 440; W. Va. Water Service Co. v. Cunningham, 143 W. Va. 1, 98 S. E. 2d 891; Pope v. Edward M. Rude Carrier Corp., 138 W. Va. 218, 75 S. E. 2d 584; Pancake Realty Co. v. Harber, 137 W. Va. 605, 73 S. E. 2d 438; Weatherford v. Arter, 135 W. Va. 391, 63 S. E. 2d 572; State v. A. R. Kelly & Co., 127 W. Va. 418, 33 S. E. 2d 230. See also the article by Judge Hay-mond, “Certified Cases Under the Statutes and the Buies of Civil Procedure.”, 65 W. Va. L. Bev. 1.

In the very recent case of State v. Wender, 149 W. Va. 413, 141 S. E. 2d 359, a unanimous decision of this Court which was comprised of the same personnel as now, the opinion contained this statement with reference to Dandy: “In General Electric Co. v. A. Dandy Appliance Co., 143 W. Va. 491, 103 S. E. 2d 310, this Court held unconstitutional and void that portion of the so-called ‘Fair Trade Act’ of this state, Code, 47-11-6, as amended, which provided that the seller of trade-marked items at a price less than that stipulated by the manufacturer was a violation of the act whether or not the seller was a party to the stipulated price contract....” (Italics supplied.) It is the opinion of this Court that the validity of Section 2 of the Act which applies to parties who voluntarily enter into contracts with relation to the provisions of the Act has not heretofore been passed upon by this Court and we now proceed to do so. We hold that the provisions of Section 2 are valid, that they embrace no object that is not clearly expressed in the title of the Act, to-wit, “AN ACT to protect trade-mark owners, producers, distributors and the general public against injurious and uneconomic practices in the distribution of competitive commodities bearing a distinguishing trade-mark, brand or name, through the use of voluntary contracts establishing minimum resale prices and providing for refusal to sell unless such minimum resale prices are observed.” (Italics supplied.) and that such provisions are not violative of any provision of the constitution of this state or of the United States. Old Dearborn Distributing Co. v. Seagram Distillers Corp., 299 U. S. 183, 57 S .Ct. 139, 81 L. Ed. 109. While there is some authority elsewhere to the contrary it is obvious that the decision of this Court in holding valid all of the provisions of the Act exclusive of Section 6 is in accord with the weight of authority in this country. See Max Factor & Co. v. Kunsman, 5 Cal. 2d 446, 55 P.2d 177; Scovill Mfg. Co. v. Skaggs Pay Less Drug Stores, 45 Cal. 2d 881, 291 P. 2d 936; Burroughs Wellcome & Co. v. Johnson Wholesale Perfume Co., 128 Conn. 596, 24 A. 2d 841; Klein v. National Pressure Cooker Co., 31 Del. Ch. 459, 64 A. 2d 529; General Electric Co. v. Klein, 34 Del. Ch. 491, 106 A. 2d 206; Seagram-Distillers Corp. v. Old Dearborn Dist. Co., 363 Ill. 610, 2 N. E. 2d 940; Joseph Triner Corp. v. McNeil, 363 Ill. 559, 2 N. E. 2d 929, 104 A.L.R. 1435; Barron Motor, Inc. v. May’s Drug Stores, 227 Iowa 1344, 291 N. W. 152; Iowa Pharmaceutical Ass’n. v. May’s Drug Stores, 229 Iowa 554, 294 N. W. 756; Goldsmith v. Meade Johnson & Co., 176 Md. 682, 7 A. 2d 176;Home Utilities Co. v. Revere Copper & Brass, 209 Md. 610, 122 A. 2d 109; General Electric Co. v. Kimball Jewelers, 333 Mass. 665, 132 N.E. 2d 652; W. A. Sheaffer Pen Co. v. Barrett, 209 Miss. 1, 45 So. 2d 838; Johnson & Johnson v. Weissbard, 121 N. J. Eq. 585, 191 A. 873; General Electric Co. v. Packard Bamberger & Co., 14 N. J. 209, 102 A. 2d 18; Lionel Corp. v. Grayson-Robinson Stores, Inc., 15 N.J. 191, 104 A. 2d 304; Bourjois Sales Corp. v. Dorfman, 273 N. Y. 167, 7 , 110 A.L.R. 1411; General Electric Co. v. Masters, 307 N.Y. 229, 120 N.E. 2d 802; Ely Lilly & Co. v. Saunders, 216 N. C. 163, 4 S.E. 2d 528, 125 A.L.R. 1308; Union Carbide & Carbon Corp. v. Bargain Fair, 58 Ohio Op. 145, 130 N.E. 2d 255; Burche Co. v. General Electric Co., 382 Pa. 370, 115 A. 2d 361; Miles Laboratories v. Owl Drug Co., 67 S. D. 523, 295 N.W. 292; Frankfort Distillers Corp. v. Liberto, 190 Tenn. 478, 230 S.W. 2d 971; Seagram Distillers Co. v. Corenswet, 198 Tenn. 644, 281 S.W. 2d 657; Sears v. Western Thrift Stores of Olympia, 10 Wash. 2d 372, 116 P. 2d 756; Weco Products Co. v. Reed Drug Co., 225 Wis. 474, 274 N.W. 426; Bulova Watch Co. v. Anderson, 270 Wis. 21, 70 N.W. 2d 243; Union Carbide and Carbon Corp. v. White River Distrib., 224 Ark. 558, 275 S.W. 2d 455; Olin Mathieson Chemical Corp. v. Francis, 134 Colo. 160, 301 P. 2d 139; Bristol-Myers Co. v. Webb’s Cut Rate Drug, 137 Fla. 508, 188 So. 91; Grayson-Robinson Stores, Inc. v. Oneida, 209 Ga. 613, 75 S.E. 2d 161; Bissell Carpet Sweeper Co. v. Shane Co., 237 Ind. 188, 143 N.E. 2d 415; Dr. G. H. Tichenor Antiseptic Co. v. Schwegmann Bros., 231 La. 51, 90 So. 2d 343; Shakespeare Co. v. Lippman’s Tool Shop Sporting Goods Co., 334 Mich. 109, 54 N.W. 2d 268; McGraw Electric Co. v. Lewis & Smith Drug Co., 159 Neb. 703, 68 N.W. 2d 608; General Electric Co. v. Wahle, 207 Ore. 302, 296 P. 2d 635; General Electric Co. v. Thrifty Sales, Inc., 5 Utah 2d 326, 301 P. 2d 741; Benrus Watch Co. v. Kirsch, 198 Va. 94, 92 S.E. 2d 384; Skaggs Drug Center, a Corporation v. General Electric Company, 63 N.M. 215, 315 P. 2d 967; Union Carbide & Carbon Corp. v. Bargain Fair, Inc., et al., 167 Ohio St. 182, 147 N.E. 2d 481.

The Circnit Conrt of Fayette County, therefore, is affirmed in its holding that the plaintiff was entitled to injunctive relief at the time the action was instituted. However, while it is true that this is a suit in which the parties are governed by equitable principles, and even though the record discloses without contradiction that the defendant wilfully and knowingly violated his contract with the plaintiff, we are constrained to hold that the provisions of the injunction granted by the trial court are too broad. We believe the restrictive language of the decree prohibiting the defendant in perpetuity from selling Fruit of the Loom products obtained from sources other than the plaintiff is not justified by the facts in the case which show that, even though it was not done strictly in accordance with the terms of the contract, defendant has cancelled his contract with the plaintiff and is not now a signatory party.

Affirmed in part; reversed in part; and remanded.