Cox v. General Electric Co. , 211 Ga. 286 ( 1955 )

Almand, Justice,

dissenting. Neither the case of Harris v. Duncan, 208 Ga. 561 (67 S. E. 2d 692), nor that of Grayson-Robinson Stores, Inc. v. Oneida, Ltd., 209 Ga. 613 (75 S. E. 2d 161), is conclusive on the questions raised in the instant case. In the Harris case, we were not concerned with the question of the right of an individual to fix a minimum selling price of a commodity, but were dealing solely with the authority of the State in enacting a statute authorizing the State Milk Control Board to fix the selling price of milk as sold by individual distributors ; and we held that such statute violated the due-process clause of the State Constitution. In the Grayson-Robinson case, we had before us the validity of the Fair Trade Act of 1937. That act was declared unconstitutional, as being contrary to and inconsistent with the provisions of the Sherman Antitrust Act as it existed at the time of the passage of the statute, and was void ab initio as offending the supremacy clause as well as the commerce clause of the Federal Constitution. In the third division of the opinion, citing Harris v. Duncan, it was held that the act was null and void as offending the due-process clause of the State Constitution. This latter ruling was unnecessary, for the reason that the court had already held the act to be void ab initio, and the statute having already been stricken by the mortal blow given in the first division of the opinion, and being “dead,” was not subject to be again stricken by a second blow, even though the second blow might have been mortal. In addition to the foregoing reason, the Grayson-Robinson case is not controlling in the instant case, because we are now dealing with an entirely new fair trade statute containing provisions which were not present in the former statute, and these new provisions compel us to re-examine the constitutional questions raised in the instant case by the defendant’s demurrer.

The Fair Trade Act of 1937 contained no declaration of public policy as a basis for enactment of the statute. The caption of the Fair Trade Act of 1953 provides that the act has for one of its purposes “to declare the public policy of Georgia with respect to property rights, trade-marks, good will, and the right and freedom to contract, and to exercise the police power of the State of Georgia so as to forbid the conduct of business in such manner as to infringe the equal rights of others, and to protect the general public against practices which may have the effect, or be intended to have the effect, of defeating or lessening competition or encouraging monopoly, by authorizing contracts stipulating minimum resale prices on commodities bearing trade-marks, brands or names, and defining as unfair competition and making actionable knowingly and wilfully to advertise for sale, offer for sale, or sell such commodities at less than the minimum prices established or stipulated in or under the contracts authorized by this Act, whether the person so advertising for sale, offering for sale or selling is or not a party to such contracts.”

Section 1 (F) of the act of 1953 provides: “Trade-marks, brands, or names of commodities, and the good will associated therewith constitute property entitled to the protection afforded by this Act.” Section 1 (G) provides that “Wilfully ahd knowingly advertising for sale, offering for sale, or selling a competitive commodity bearing a trade-mark, brand or name of the producer or distributor thereof contrary to the provisions of this Act and contracts entered into pursuant thereto of which the seller of such commodity has knowledge constitutes a wrongful interference with the property rights of the parties to such contracts.”

It is thus to be seen that the act of 1953 creates a property right in the manufacturer or distributor of a commodity, whereby, when the owner of the commodity makes a contract as to the minimum price at which the commodity is to be sold, it is a breach of such property right for any person to sell or offer to sell such a commodity at less than the price stipulated in the contract, whether he signed the contract or not. We know of no provision in the Constitution that would prohibit the General Assembly from making valid such a contract between the producer or distributor as to the minimum price at which such commodity should be sold. A contract between a manufacturer and retailer against price-cutting unless the trade-mark or trade name was detached from the commodity sold would be valid at common law. Ingersoll v. Hahne, 89 N. J. Eq. 332 (108 Atl. 128). The question, then, comes down to this: whether or not the General Assembly can give to a producer or distributor a right of action against one not a party to a contract fixing a minimum price of sale, without violating the right of the non-signer to sell the commodity as his own, at a price he may determine, without violating the due-process clause of the Constitution, which protects his ownership and property and his right to make private contracts. The act of 1953 does not forbid one who buys a commodity which bears a trade-mark or brand of the producer or distributor from selling or disposing of the same, but simply says that, if one purchases for resale in the open market such commodity, with the trade name of the owner or producer thereon, knowing that such commodity has been originally sold under a contract or agreement that the original purchaser would not sell at less than the stipulated price, he, the non-signer, must remove the trade-mark, brand or name from the commodity. The act does not forbid him from selling his own property, but simply forbids his reselling the commodity with the trade-mark, brand, or name of the owner for less than the minimum price.

As was said in Old Dearborn Distributing Co. v. Seagram Distillers Corp., 299 U. S. 183, 193 (57 Sup. Ct. 139, 81 L. ed. 109, 106 A. L. R. 1476): “Appellants here acquired the commodity in question with full knowledge of the then-existing restriction in respect of price which the producer and wholesale dealer had imposed, and, of course, with presumptive if not actual knowledge of the law which authorized the restriction. Appellants were not obliged to buy; and their voluntary acquisition of the property with such knowledge carried with it, upon every principle of fair dealing, assent to the protective restriction, with consequent liability under § 2 of the law by which such acquisition was conditioned. . . The ownership of the good will, we repeat, remains unchanged, notwithstanding the commodity has been parted with. Section 2 of the act does not prevent a purchaser of the commodity bearing the mark from selling the commodity alone at any price he pleases. It interferes only when he sells with the aid of the good will of the vendor; and it interferes then only to protect that good will against injury. It proceeds upon the theory that the sale of identified goods at less than the price fixed by the owner of the mark or brand is an assault upon the good will, and constitutes what the statute denominates 'unfair competition.’ See Liberty Warehouse Co. v. Burley Tobacco Growers’ Assn., 276 U. S. 71, 91-92, 96-97. There is nothing in the act to preclude the purchaser from removing the mark or brand from the commodity — thus separating the physical property, which he owns, from the good will, which is the property of another — and then selling the commodity at his own price, provided he can do so without utilizing the good will of the latter as an aid to that end.”

The Supreme Court of North Carolina, dealing with a similar fair trade statute, in discussing the question of whether there was an unreasonable restriction placed upon a dealer in the commodity, stated: “The restriction is not imposed after the acquisition of the property, and is not in derogation of an existing or established right. Under the statute it was a condition that had already attached to the property. It was known to the prospective purchaser, and he was under no obligation to assume it. Morally and legally he is presumed to have accepted the condition by his voluntary act of purchase. . . Such a restriction is not confiscatory unless it is unreasonable or contrary to the principles of the Constitution reasonably interpreted; and one who invokes the aid of the Constitution in this respect must show that he has a title free from condition, at least with respect to the supposed invasion.” Ely Lilly & Co. v. Saunders, 216 N. C. 163, 176 (4 S. E. 2d 528).

The General Assembly, in the enactment of the 1953 Fair Trade Act, made the following declaration of public policy: “The public interest and general well being of the State of Georgia will best be served by the maintenance of resale prices of trademarked, branded or named commodities which are in free and open competition with commodities of the same general class”; and this statement is supported with a recitation of the grounds of this conclusion. From public records, of which we can take judicial notice (see appendix to Schwegmann Bros. v. Calvert Distillers Corp., 341 U. S. 384, 71 Sup. Ct. 745, 95 L. ed. 1035); U. S. House of Representatives, Publication No. 1292 (1952), No. 1437 (1952)), these conclusions are fully warranted. It is not for us to quesiton the wisdom or propriety of the legislature in creating a right of action in favor of a producer or distributor of a commodity bearing a trade-mark, name, or brand against one who knowingly sells such commodity at a price less than that fixed in a contract between the producer or distributor and the original purchaser. The defendant in the instant case being under no obligation to buy the commodity bearing a trade-mark, name or brand (he having acquired no right to sell the trademark, name or brand separate from the commodity), I cannot see how he can complain that his right to sell his own property, or to contract under the due-process clause of the Constitution, has been violated. His freedom to buy is unhampered. His freedom to sell is limited only by the requirement that he must not intentionally violate the contract rights of the owner of the Wade-mark, name, or brand.

The act being valid, the third count of the petition clearly alleges a case which, as against the general demurrers, entitles the plaintiff to the equitable relief sought.