Opinion
The following relevant and material facts in this case were admitted by answers to a demand for admissions served by the complainant upon the defendant:
I find that complainant is a corporation duly organized and existing under and by virtue of the laws of the State of New York, with its principal office and place of business at 444 Madison Avenue, in the City, County and State of New York, and that complainant is a citizen of the State of New York.
That defendant is a corporation organized and existing under and by virtue of the laws of the State of New Jersey, with its principal office and place of business at 164 Halsey Street, in the City of Newark, County of Essex and State of New Jersey, and that the said defendant is a resident of the State of New Jersey.
That for several years prior to the commencement of this action the complainant was and now is engaged in selling and distributing throughout the State of New Jersey and other states of the United States, perfumes, toilet preparations and cosmetics, all of which bear the trademark, name, brands and labels 'Guerlain' alone, or in combination.
That at on all of said times, complainant was and now is the sole owner of the business and good-will associated with the sale and distribution of said products.
That the complainant has built up a good-will appertaining to such products with the purchasing public of the State of New Jersey and other states of the United States, as well as with retailers dealing in such products, amounting to many thousands of dollars.
That the perfumes, toilet preparations and cosmetics sold and distributed by the complainant herein, are commodities which bear a distinguishing trademark, brand or name of the producer or owner thereof, to wit: the complainant herein.
That said articles are of standard quality in fair and open competition throughout the United States and in the State of New Jersey with
throughout the United States and in the State of New Jersey with commodities of the same general class produced by others.
That the Legislature of the State of New Jersey has enacted a statute entitled 'An Act to protect trade-mark owners, distributors and the public against injurious and uneconomic practices in the distribution of articles of standard quality under a distinguished trade-mark, brand or name', which Act is Chapter 58, P.L. 1935 and became effective March 12, 1935, and is popularly known as 'The Fair Trade Act', N.J.S.A. 56:4-3 to 56:4-6; 1:1-10.
That on or about August 17, 1937, the Congress of the United States enacted a statute known popularly as the 'Miller-Tydings Resale Price Maintenance Act' (15 U.S.C.A. § 1).
That at all of the times mentioned in the complaint herein, the defendant did and does now own, operate and manage a retail establishment in the City of Newark, in the County of Essex and State of New Jersey, in which the aforesaid products of complainant and the products of other producers of the same character of merchandise as those of complainant are sold.
Upon the pleadings and proofs presented by the parties at the argument as on final hearing, I find as follows:
That this cause involves a controversy between citizens of different states and that the value of complainants good-will, which is sought to be protected in this cause, exceeds the value of $3,000, exclusive of interest and costs.
That on or about October 8, 1937, complainant adopted a system of selling and distributing its products by which written contracts are entered into between complainant and retailers of complainant's products.
That the specimen of said retail contract and the form letter accompanying the same is attached to the bill of complaint herein, is marked Exhibit 'A' thereto, and is a true copy of the aforesaid contracts. That on numerous occasions subsequent to October 8, 1937 the defendant was specifically notified not to advertise or offer to sell any of the products bearing the complainant's aforesaid trademarks at less than the price stipulated in complainant's contracts.
That the defendant with full knowledge of said system of business of the complainant and of the minimum retail prices established by the complainant's under the aforesaid 'Fair Trade Act', has been and at the time of the institution of this suit was advertising, offering for sale and selling complainant's products at prices less than those stipulated in said contracts.
That the defendant knowingly and willfully has sold products of complainant, at prices less than those established by the complainant in the aforementioned contracts as minimum retail prices as set forth in the following schedule:
Commodity of Complainant
Prices established by
Prices at which
complainant's contract
defendant sold or
under the "Fair Trade
offered to sell such
Act".
commodity
------------------------
----------------------
--------------------
Small size face powder,
$1.25
$ .97
Lipstick,
1.25
1.09
Shalimar perfume, per dram,
1.60
1.04
That despite said notice as above set forth, defendant continues to offer, advertise and sell complainant's aforementioned products at prices less than those established as the minimum retail prices of complainant as aforesaid.
That the sale made by the defendant as hereinabove set forth, at prices less than those stipulated in complainant's contracts, and the acts of defendant hereinabove described have not been made.
(a) in closing out the owner's stock for the purpose of discontinuing the delivery of any such commodity, nor (b) when the goods were damaged or deteriorated in quality, and notice was given to the public thereof, nor (c) by any officer acting under the order of any court.
That prior to the institution of this suit defendant in good faith offered complainant to enter into contract for the sale and resale of its products bearing the trademark, name, brand, label, 'Guerlain', alone or in combination, and to maintain the minimum resale prices legally fixed for the State of New Jersey, and that said offer was refused by complainant.
Upon the agreed facts and the findings of fact above, I find in favor of the complainant as to all goods, wares and merchandise of the complainant purchased by the defendant subsequent to October 8, 1937.
I find in favor of the defendant and against the complainant with respect to all merchandise of the complainant owned by it prior to October 8, 1937.
I accordingly grant to the complainant a writ of injunction restraining and enjoining the defendant, its officer, directors, agents, servants, attorneys and employees from advertising or offering for sale or selling in the State of New Jersey, any commodities distributed by the complainant or any commodities bearing the trademark, name or brand controlled in the State of New Jersey by the complainant, purchased by the defendant subsequent to October 8, 1937, at less than the price stipulated in contracts entered into or which may hereafter be entered into by complainant pursuant to the provisions of the said 'Fair Trade Act' of State of New Jersey of March 12, 1935.
That the complainant have such other and further relief at the foot of the decree as it may be advised is necessary and proper.
Kristeller & Zucker (by Lionel P. Kristeller), of Newark, N.J., for complainant.
Kraemer, Siegler & Siegler (by Joseph Kraemer), of Newark, N.J., for defendant.
FAKE, District Judge.
The defendant, among other things, urges that no injunction should issue in this case because the plaintiff refused an offer of the defendant made prior to the institution of this suit to enter into a contract for the sale and resale of plaintiff's products and to maintain the minimum resale prices legally fixed for the State of New Jersey, citing Lentheric, Inc. v. Weissbard, 122 N.J.Eq. 573, 195 A. 818, 819; in which the learned Vice Chancellor reasons as follows: 'While the principle is well established that the owner of an article may dispose of it as he wills and the right to refuse to sell is one of the basic instances of ownership, it is also well established that the weapon of injunction may be afforded a complainant or withheld by the chancellor in the exercise of sound discretion. Here, the complainant seeks to compel the defendants to maintain the minimum prices fixed by it for the sale of its trade-marked and branded articles and at the same time refuses to make it possible for defendants to deal in its products and thus to maintain such prices. ' He who seeks equity must do equity."
Referring to Chapter 58 of the Laws of 1935, which is the Act under consideration, the following paragraph is found: 2. 'Willfully 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 section one 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. ' N.J.S.A. 56:4-6.
It will be noted that unfair competition within the purview of the Act may be found whether the defendant 'is or is not a party to such contract. ' It therefore follows in the instant case that whether the defendant had a contract or not he is guilty of unfair competition, there being no obligation either at law or in equity upon the part of the plaintiff to enter into such a contract with the defendant; the maxim: 'He who seeks equity must do equity' does not apply. Moreover, the case cited deals with a preliminary injunction only.
The very recent case of Field v. Fidelity Union Trust Co. et al. 108 F.2d 521, 526, of this Circuit filed December 20, 1939, opinion by Circuit Judge Biddle lays down the following rule: 'We believe that the proper rule is that federal courts should in all instances follow the law of the state with respect to the construction of state statutes. Where that law has been determined by the courts of last resort their decisions are stare decisis, and must be followed irrespective of our opinion as to what the law ought to be. As to the pronouncements of other state courts, however, we are not so bound, but may conclude that the decision does not truly express the state law.'
My conclusion is that an injunction should issue upon the facts presented in the instant case.