Case Title: Fed. Cartridge Corp. v. Helstrom

Citation: 202 Or. 557, 276 P.2d 720

Docket Number: 

State: oregon

Court: Oregon Supreme Court

Date: 1954-11-24T00:00:00Z

Document:
Reargued November 10, 1954.
Affirmed November 24, 1954.
*558 Cleveland C. Cory, of Portland, argued the cause for appellant. With him on the briefs were Hugh L. Biggs, and Hart, Spencer, McCulloch, Rockwood & Davies, all of Portland.
Bartlett F. Cole and R.R. Bullivant, of Portland, argued the cause and filed briefs for respondent. Herman T. Van Mell, of Chicago; Stanley A. Weigel, of San Francisco; and Nicholas Jaureguy, of Portland; filed a brief for Sunbeam Corporation as amici curiae, urging reversal.
AFFIRMED.
TOOZE, J.
This is a suit for an injunction and for damages, brought by plaintiff Federal Cartridge Corporation against Henning Helstrom, dba Foster Sporting Goods, as defendant. Decree was entered in favor of defendant, and plaintiff appeals.
Plaintiff is the manufacturer of certain shotgun shells which are sold in the state of Oregon and elsewhere, and which bear plaintiff's exclusive registered trademarks and brand names of "Hi-Power" and "Monark". Acting pursuant to the provisions of §§ 43-401 to 43-404, incl., OCLA (ORS 646.310 to 646.370, incl.), commonly known as the "Fair Trade Law", plaintiff entered into written agreements with wholesalers and retailers in and about the city of Portland and elsewhere in Oregon. All agreements were in form and substance the same. One of such agreements is that entered into between plaintiff and one Semler, of Portland, Oregon, on February 17, 1950, whereby Semler agreed not to advertise, offer for sale or sell any of plaintiff's products in any state having a Fair Trade Act "at less than the applicable Minimum Resale Price then in effect for the Product *559 advertised, offered for sale, or sold." Under said contracts, minimum retail prices at which such shotgun shells might be sold were stipulated.
On March 17, 1952, defendant, a merchant of Portland, Oregon, purchased at Tacoma, Washington, a large supply of such shotgun shells for the purposes of resale at retail within the state of Oregon. Defendant never entered into any contract with plaintiff; in other words, he is a nonsigner. During the year 1952, both prior to and following the filing of the complaint in this suit (October 17, 1952), defendant advertised, offered for sale, and sold such shotgun shells at retail for less than the stipulated minimum retail prices established under said contracts. Prior to the commencement of this suit, plaintiff gave notice to defendant of the existence of its Oregon Fair Trade agreements and the stipulated resale prices thereunder.
In its complaint plaintiff prayed for injunctive relief against the actions of defendant, and for damages for sales made by defendant subsequent to July 14, 1952.
July 14, 1952, marks the date of the enactment by Congress of the Federal Fair Trade Act (McGuire Act): 66 Stat 632, 15 USCA 10, § 45, as amended.
The principal question for decision on this appeal is whether a nonsigner of the fair trade agreements entered into by plaintiff, who knowingly advertises and sells a fair-traded commodity may claim an absolute immunity from sanctions of the Oregon Fair Trade Law because the commodity which is sold in interstate commerce was purchased by him for purposes of resale prior to the date of the enactment of the McGuire Act, supra.
*560 Section 43-401, so far as material to the problem before us, reads as follows:
Section 43-402, OCLA, provides:
Oregon's Fair Trade Law was adopted pursuant to the authority attempted to be conferred by Congress in the adoption by it of the Miller-Tydings Amendment to the Sherman Antitrust Act of July 2, 1890: 50 Stat 693, 15 USCA 4, § 1.
Based upon the decision of the United States Supreme Court in Old Dearborn Distributing Co. v. Seagram-Distillers Corp., 299 US 183, 81 L ed 109, 57 SC 139, 106 ALR 1476, we held the Fair Trade Law of this state to be constitutional: The Borden Co. v. Schreder, 182 Or 34, 37, 185 P2d 581.
In 1951 the United States Supreme Court again considered a state fair trade act as it applied to nonsigners of fair trade agreements: Schwegmann Bros. v. Calvert Corp., 341 US 384, 93 L ed 1002, 71 SC 762.
In that case Mr. Justice DOUGLAS, speaking for the majority of the court, said (341 US 389):
As to nonsigners, the Supreme Court held that the provisions of the fair trade law of Louisiana which sought to bind them to the fair trade agreements were invalid.
In 1951 the validity of Oregon's Fair Trade Law, as applied to nonsigners, came before this court for decision. In Lambert Pharmacal Co. v. Roberts Bros., 192 Or 23, 233 P2d 258, we held, on the authority of the Schwegmann case, that plaintiff's price resale maintenance activities were illegal per se, as being in violation of the provisions of the Sherman Antitrust Act. In discussing the effect of the Schwegmann case, Mr. Justice LUSK, in speaking for the court, said (at page 27 of 192 Or):
In the light of these two decisions, it is manifest that at the time of the adoption of Oregon's Fair Trade Law, the provisions thereof respecting nonsigners were *563 in violation of the Sherman Antitrust Act and, therefore, were invalid and void.
The purpose of the McGuire Act was to overcome the objections to the fair trade laws as they applied to nonsigners, and as determined in the Schwegmann case. It is stated in the McGuire Act:
We note that in subd. (5) of § 5 (a) of the McGuire Act, the prohibitions of the Sherman Act against "contracts or agreements providing for the establishment of maintenance of minimum or stipulated resale prices on any commodity referred to in paragraph (2) of this subsection, between manufacturers, or between producers, or between wholesalers, or between brokers, or between factors, or between retailers, or between persons, firms, or corporations in competition with each other," are retained.
Whether the McGuire Act, in the light of what Mr. Justice DOUGLAS said in the Schwegmann case, actually accomplished its purpose, it is unnecessary for us to decide in the instant litigation.
However, from what has been said, it is obvious that at least until July 14, 1952, when the McGuire Act was adopted, there clearly was no valid law in this state which would bind nonsigners to these fair trade agreements.
*564 Defendant challenges the constitutionality of our Fair Trade Law, as it applies to nonsigners, upon several grounds. Some of those grounds are:
1. That the statute exceeds the police power because there is no real or substantial relation between its price-fixing provisions and the public order, health, safety and welfare, and because it violates the natural rights inherent in the people, all in violation of the Preamble and Art 1, § 1, of the Oregon constitution.
2. That the statute is invalid in that it constitutes a delegation of legislative power to private persons in violation of Art 1, § 1, and Art IV, of the state constitution.
3. That the statute is unconstitutional in that it violates the due process clauses of both the Federal and state constitutions.
Although additional grounds of unconstitutionality are asserted against the Act, the foregoing constitute the principal contentions urged by defendant.
1. The law is well established that a court will not decide a case upon constitutional grounds unless absolutely necessary to a determination of the issue before it. If the decision can be based upon any other reasonable ground, such ground will be adopted, and the constitutional questions will be left open until a case is presented where a decision thereon becomes necessary. In Elliott v. Oliver, 22 Or 44, 48, 29 P 1, we quote with approval the following from Cooley's Const Lim:
Also see Oregon Cry. Mfrs. Ass'n. v. White, 159 Or 99, 78 P2d 572; Winslow v. Fleischner et al., 112 Or 23, 228 P 101, 34 ALR 826; McKinney v. Watson, 74 Or 220, 145 P 266; State ex rel. v. Malheur County Court, 46 Or 519, 81 P 368.
2. It also is well settled that where a statute is capable of two constructions, one of which would render it invalid and the other valid, the construction which will uphold its validity must be adopted by the court. In the City of Portland v. Goodwin, 187 Or 409, 416, 210 P2d 577, Mr. Justice BRAND, speaking for the court, said:
With the foregoing rules in mind, we approach a consideration of the statute in the light of the facts present in this case.
At the outset, it should be pointed out that defendant maintains that inasmuch as the Oregon statute was invalid ab initio, as it applied to nonsigners, the adoption of the McGuire Act by Congress in 1952 could not and did not breathe the breath of life into this void enactment.
For the purposes of this case, we may assume but we do not decide, that the adoption of the McGuire Act, without any further action on the part of our own legislature, had the effect of giving life to the provisions of this state's Fair Trade Law as respects nonsigners, so as to make that law valid and effective on July 14, 1952. Under that assumption, it is manifest that the effect given our statute is the same as though it had been reenacted by the legislature and became effective on July 14, 1952. It could have no effect whatever prior to that date.
In the light of the concession we have made for the purposes of this case, the question is squarely presented whether the Act applies to the conduct of defendant, a nonsigner, who purchased the commodities in open market for resale at retail, at a time when no valid law or contract existed which in any way affected his right to resell the property at any price he saw fit.
Most if not all state courts which have upheld the validity of fair trade laws such as ours, as they applied to nonsigners, have relied and based their decisions *567 upon the authority of Old Dearborn Distrib. Co. v. Seagram-Distillers Corp., supra. As before observed, we did that: The Borden Co. v. Schreder, supra.
We must look, therefore, to the Old Dearborn Distrib. Co. case to determine the basis of its holding that nonsigners were bound by the provisions of the statute. At page 191 of 299 US, the Supreme Court of the United States spoke as follows:
After referring to § 1 of the Illinois Fair Trade Law (The same as the Oregon statute.), the court said:
And then, at page 193 of 299 US, the court states the theory upon which it based its conclusion that a nonsigner was bound:
In other words, the basis of the court's conclusion is that the nonsigner, by purchasing the goods with knowledge of the contract and the law applicable thereto, impliedly assented to the contract, and, by such implied assent, ratified and became a party to and was bound by the contract.
The important thing to note about the above holding is that the commodities involved in that litigation were purchased while a supposedly valid law, and also valid contracts, were in effect. It is obvious, therefore, that in the instant case the theory adopted by the United States Supreme Court in the Old Dearborn Distrib. Co. case as the basis for holding nonsigners liable does not apply.
The question under discussion is pinpointed in Ely Lilly & Co. v. Saunders, 216 NC 163, 4 SE2d 528, 125 ALR 1308, 1319. After calling attention to the due *569 process clause of the North Carolina constitution, the court said:
3. We now come to a direct consideration of the Fair Trade Law of this state as applied to the facts in this case. At the outset it should be stated that in all cases it is presumed that the legislative body intended to adopt a law that met constitutional demands. It is clear that if it were determined that the legislature, in enacting the Fair Trade Law, intended to make its provisions retroactive so as to apply to commodities acquired by a person prior to its effective date, grave doubts would arise as to the statute's constitutionality, as being in violation of the due process clauses of both federal and state constitutions. As stated by the court in Old Dearborn Distrib. Co. v. Seagram-Distillers Corp., supra: "* * * the right of the owner *570 of property to fix the price at which he will sell it is an inherent attribute of the property itself, * * *."
On the other hand, if it be determined that the legislature intended to make the Act applicable only to property acquired after the law became effective under conditions such as are outlined in the Old Dearborn Distrib. Co. case, supra, then (conceding for the purposes of this case the correctness of the conclusions reached by the United States Supreme Court in the Old Dearborn Distrib. Co. case) the enactment would not be invalid under the due process clauses.
4, 5. A review of the provisions of the Fair Trade Law of this state will disclose a clear intent on the part of the legislature to make the statute applicable to transactions in futuro; that its purpose was to govern sales of property purchased after its effective date. This construction of the statute is a reasonable construction, and, under the authorities above noted, it is our duty to adopt it.
The provisions of the Fair Trade Act do not apply to the property acquired by defendant. The trial court did not err in dismissing plaintiff's suit.
The decree is affirmed.