The Detroit times., 1914-07-22
CLAIMS RIGHT
TO REFUSE TO
Sell PRODUCT
Kellogg Company, of Kalamazoo,
Argues That II Hasn't NiOlat-
ed Antitrust law
NO CONTRACT EXISTS
AS TO PRICE SCHEDULES
Admits Though, That Dealers
Undertaking Can't Purchase
Any More Goods

Does the refusal OF a manufacturer
OF a patented article IN tae absence
OF contract 90 maintain NN'a
schedule OF prices between joootr and
retailer. and retailer and fonso+lt-
TO supply GOODS 10 dealer who under
sells a certain published schedule ol
prices. constitute q violation oi lhf
antitrust law
That IS the question 40 issue in th"
government suit against tho Neil'A-
Toasted Corn Flakes Go. Of kaiama
zoo. argument on The defense, w}+
ton TO dismiss which began before
the United States circuit court OF APP
peals. here Tuesday
This Is the first time courr has been
In session In Detroit since Nt+
Judges Warrington hnalpta and
futile constitute Me tribunal which rs
hearing the present litigation
Attorney Fred NJ ChappeH of kaE
Rmazoo representing the keHos COM
pany. in HIS motion for dismissal. OF
the charge against his clients alleged
that the Kellog company entered In
10 no contract either wifh jobbers or
retailers. fixing price Al which the
goods should Be sold He admitted.
however that a published scale OF
prices was maintained and that deal
ers refusing 10 abide hy them We're
not allowed 70 purchase goods from
his company
His clients had a right 70 do this he
said. because Of the fact that the con-
tainer in which the manufactured ar
ticle was packed IS patented and be-.
cause Of the right OF any person 10 re-
fuse 10 sell his product 10 any other
person, He maintained that the man
ufacturer or other owner OF any ar
ticle, whether patented or not had an
inherent riEht TO refuse 70 part With
that property and that, because OF
this fact-his clients were perfectly
within their rights IN reSnsinK--o sell
Cutting prices on the container he
said. amounted TO a virtual violation
OF patent. and, In the absence OF any
express contract or agreement be-
aween manufacturer iobber or retail.
Ter his company had not violated the
law and consequently. was not IN vio-
lGtion OF the antitrust law on these
grounds he moved FOR the dismissal OF
the governments complaint
In answer 20 the motion for dism!s.
sal. District Attorney CLYDE /. Web
ster recited alleged former practices
OF the Kellogg company in its at
tempts 20 maintain prices He based
his argument on admissions 1y At
torney Chappell in his address, TO
the court
He stated that, until the decision in
the suit OF the government against
the Miles Medical Co.. manufacturers
OF a proprietary medicine, the kel
logg company had divided the United
States into three districts, and sold
its goods by the carton 10 jobbers In
these districts az price not less than
$3.50 nor more than 81 80 a case the
jobber in turn to sell 10 tie retailer
at specified figure and the retailer
70 sell 10 the public at not less than
10 cents per single box
Al that time. Mr. Webster said, the
Kellogg company printed on its boxes
a warning 70 dealers in which a fine
OF $50 was specified for failure 70 live
up to the terms OF the contract under
which the goods were sold. and furth.
er reserving the right OF the company
70 withhold goods from persons or
firms violating the agreement
After the Miles medical decision, he
said the Kellogg company discontin-
ued its practice OF entering into con.
tractural relations with its customers
and obtained a patent on the carton
in which the manufactured fakes
we're packed. Il then caused TO be