The Providence news. (Providence [R.I.]) 1891-1906, 1904-11-30
Judge Brown Hands Down an
Important Opinion.
SPERRY & HUTCHINSON FAVORED
Court Holds That Mechanics Clothing Co.
Violates It's Privileges In Purchasing
Trading Stamps From Public.

Judge Brown of the. United States ctr
cult court handed down late yesterday
afternoon. an opinion in which the court
practically sustains the contention OF the
sperry A. Hutchinson company in its suit
aga inst the Mechanics Clothing company
OF this city.
The opinion was written on the de-
murrers fled by the defendant to Ger
tain Ioiitns Of the bill OF complaint
The complainant company sought 10
have tne clothing company enjoined from
buying ard reissuing the trading stamps
I'm subsiar italy the same manner that
they wore Hrst issued by the Sperry &
Hutchinson company.
! The opinion was partially as follows.
the portions noted being those most d.
rectly aimed at the vital points in the
case:
| BY demurrers 10 portions OF the bill
the defendant seeks 10 raise the question
Of It's right 10 buy and 10 reissue trad
ing stamps in substantially the same
manner I'm which they are issued by mer-
chants who. by special contract with the
Sperry & Hutchinson company. are au-
thcr,ed 10 issue the stamps. Passing oh
jections 20 the form OF the demurr"~s.
we may consider the substantial
| tion.
Ordinarily. one who has a right TO
transfei property may do so upon such
terms and conditions as he pleases, and
may II he likes. give 1t as bonus for
sale OF other property.
"A trading stamp Is not ordinary prop
| erty: IL Is sui generis. II represents
somewhat complicated transaction and,
from It's nature. / think there are neces-
sary limitations upon the modes I'm
which IL may he transferred. BY exten-
sive advertising. by promises 20 the
public, by the exhibition OF goods. By
| the circulating Of books giving a gen
eraI description OF the business. the
Sperry q Hutchinson company creates
! demand for the trading stamp. BY con-
tract between the complainant and the
| merchant the title TO the stamp does not
vest in the merchant who issues IL, but
remains In the company until II has been
issued I'm regular conrse to customer
Of the merchant. rpe customer IL ex
pressly offered only the right TO redeem
the ST mp and impliedly the right TO
transfer Il for redemption. The
merchant I'm a certain sense is the agent
OF the company in issuing the stamps 10
the pupilc.
The trading stamp. when issued. rep
| resents a closed ira nsaction between the
| merchant and the company as well as an
stamps. As token or voucher OF the
! sale and use OF so much advertising the
| trading stamp is necessarily consum-
| able article an article designed for a sim
| gle use I'm an advertising scheme. What
! the defendant wishes 10 do is to procure
| for itself trade advantage as distribute
OF trading stamps. Although the
! stamps have beer issued 10 collectors for
| limited purpose. the defendant desires
| To use them for purpose for which cb-
| VIously they were not intended in the
hands Of a collector, The trading stamp
| company has made large expendi ures 10
create q demand and. although ITS sole
| source OF profit is In the sale OF rights 10
4 supply this demand, the defendant. which
| has not paid the trading stamp company
! lcr this right. asserts that II has ac-
! qulred II equally with those merchants
| who have paid for II. BY REFUSING ,he
! stamp a an advertisement Il seeks to get
| for nothing what others are required TO
pay for. and 10 institute a destructive
| competition with authorized merchants
! which tends 10 destroy the value Of the
starp and TO lnjure the complainants
! business.
"The trading stamp is an artificial cre-
alton. The company, having created II,
| and having created a value for IL may
| dispose OF IL on such terms as IL sees
| ft-ILHaay- lH-the- first instance restrict
| the right TO issue It for advertising pur-
poses 10 such persons as II may select
| ard to such persons as are willing TO pay
| for IL. The public Is entitled to receive IL
| upon the terms offered namely. that II Is
| exchangeable for goods But II Is asked,
| why. II the right OF a customer to trans
| fer II is conceded. may he not transfer II
In any mode he pleases and give IL as an
| advertisement IL he sees Mt? sensible
| answer TO this question. I think IL this:
Because he thereby appropriates 10 him
self the trading stamp company's leglt-
| mato share OF the transaction 7 accept
| the following statement from the COM
plainants brief:t
When once given out by a merchant
they have served the advertising purpose
| for which they were intended. and 10 per
init the collector Of the stamps 10 again
advertise with them would he going be
yond what was the clear intention OF the
| parties and would he destructive Of tho
rights OF the complainant"
| While transfer ~ ordinary prop
| erty by the owner upon any terms. de
| prives other persons Of no rights. this
| Is not always the case with the trading
| stamp. While " may be transferred I'm
any way which confines its use within the
! purpose for which II was issued, 10 may
not be transferred i'm such a way as 20
| destroy Its value as an instrument OF
special trade advantage or advertising
as 10 deprive the company which Gre
| ated the value or the stamp. and which
has assumed the obligations to redeem Il.
OF It's right 10 compensation for expendi-
lures and for redeeming the stamps
I'm my opinion the bill states n case
for full relief against the defendant. II
charges positive fraud and misrepresen-
tation in conjunction with tho collection
and reissue or these stamps As these
| matters are dealt with I'm tho opinion
on the petition for a preliminary I'm
! junction ~ is not necessary 90 repeat.
| Upon such bill court OF equity may
give full relief: and the complainant. in
my opinion. Is entitled upon the alega-
| tons of tho bill not only 20 restrain
fraudulent rnisrepresentstions. but also 20
restain th" diversion % the trading STAMP
from the purpose for which ~ was issued.
and the appropria tion by the defendant Of
what u has not paid the complainant for
ann What IL did not receive ne assignee
/ 30 he t@Aa II -