Court Opinion

ID: 9445629
Source: CourtListenerOpinion
Date Created: 2023-08-03 21:34:47.339902+00
Date Added: 2024-06-11T17:30:21.275811
License: Public Domain

WATERMAN, Circuit Judge
(concurring).
I concur in the result reached by Judge CLARK. With him I hold that New York’s Feld-Crawford Act is unenforceable against Masters Mail Order Company of Washington, D. C., Inc., the defendant here. Masters is located in the District of Columbia where there is no resale price maintenance statute, law, or public policy. The prices Masters receives for goods sold by it to New York purchasers, being goods shipped in interstate commerce, are, I believe, governed by the public policy of the District of Columbia, the state where Masters is located. That policy permits free-pricing. The public policy of New York that restrains free-pricing in favor of agreements of resale price maintenance I hold is inapplicable to retail transactions of sale made in interstate commerce by this District of Columbia retailer; for I believe that for the purposes of the McGuire Act, 15 U.S.C.A. § 45(a), all such sales take place in the District of Columbia. I reach this conclusion from my reading of the McGuire Act and my understanding of the intent of Congress in passing that legislation. Hence, although Judge CLARK and I agree in reversing the lower court, I differ somewhat from him in reaching that decision.
In enacting the McGuire Act, 15 U.S. C.A. § 45(a), the Congress indicated its intention to leave the adoption or rejection of resale price maintenance to the individual states. The states’ rights basis of this legislation clearly appears in the preamble of the Act:
“That it is the purpose of this Act to protect the rights of States under the United States Constitution to regulate their internal affairs and more particularly to enact statutes and laws, and to adopt policies, which authorize contracts and agreements prescribing minimum or stipulated prices for the resale of commodities and to extend the minimum or stipulated prices prescribed by such contracts and agreements to persons who are not parties thereto. It is the further purpose of this Act to permit such statutes, laws, and public policies to apply to commodities, contracts, agreements, and activities in or affecting interstate or foreign commerce.” 15 U.S.C.A. § 45 note.
To carry out this purpose, the McGuire Act provides that the applicable state law shall be that “ * * * in effect in any State, Territory, or the District of Columbia in which such resale is to be made * * * ” I think we must interpret this language in a way that will most effectively implement the intent of Congress to permit the individual states to adopt or reject “fair-trade” laws and then to enforce those laws in the event of their adoption. We should not interpret the language to permit the policy of more than one state to affect the transaction of sale; or to permit parties to the sale to “contract out” of the applicable state law or to “pick a state law” to suit their convenience. Since the place of resale is not defined by the Act, if we construe that phrase to mean the place where the seller of the goods is located, we obtain the certainty we seek consistent with the intent of Congress to preserve the rights of individual states to regulate in this field, and we do so by an interpretation clearly reasonable from the language of the Act.
I find support for my position in the legislative history of the McGuire Act. During the debates in Congress preceding its enactment, Congressman Cole of Kansas offered an amendment allegedly designed to protect retailers located in fair-trade states from competition from outside those states, and to prevent “raids on the part of mail order houses and cut rate retailers and wholesalers in non-fair-trade states.” 98 Cong.Rec. 495? (1952). That amendment, insofar as here relevant, provided:
*689“Whenever by contract or agreement described in subsection (2) a stipulated or minimum resale price may be established for a commodity in any State, Territory, or the District of Columbia, where such a contract or agreement is lawful, it shall be an act of unfair competition, actionable at the suit of any person damaged thereby, to wilfully and knowingly, in interstate commerce (1) sell or (2) have transported for sale or resale or (3) deliver pursuant to a sale, or otherwise deliver, such commodity in any such State, Territory, or the District of Columbia, where such a contract or agreement is lawful, at less than the price or prices so established in such contract or agreement.” 98 Cong.Ree. 4952 (1952) (Emphasis added.)
This amendment was vigorously opposed by Congressman Patman of Texas, who pointed out that a retailer located in a free-pricing jurisdiction like Texas would be prevented from selling to nearby customers who resided in a fair-trade state at less than the fair-trade prices maintained in the latter jurisdiction. 98 Cong.Ree. 4953 (1952). Such interference with the pricing policy of a retailer located in a free-pricing jurisdiction would be “entirely contrary to the [States’ right] concept we have in advocating the McGuire bill.” The Cole Amendment, he pointed out, would place “a burden upon the merchants in those States where they have no fair-trade law.”
The Cole Amendment was rejected by the House of Representatives, which passed the McGuire Act in its present form. 98 Cong.Ree. 4956 (1952). However, in addition to criticism such as that of Congressman Patman, many Congressmen apparently opposed the Cole Amendment because it created a federal cause of action. See, e. g., remarks of Congressman Harris, of Arkansas, 98 Cong.Rec. 4954 (1952). Hence the defeat of that Amendment can be explained on several grounds. Nevertheless, the absence of the controversial phrase, “(3) deliver pursuant to a sale, or otherwise deliver,” quoted above, is support for my belief that the Congress intended that a retailer should be governed only by the fair-trade law of the jurisdiction in which he is located.1
I also find authority for my position in court decisions. Prior to the passage of the McGuire Act, the Third Circuit had held that a resale by a retail mail order house located in Pennsylvania was not exempt from the Sherman Act, 15 U.S.C.A. § 1 et seq., and therefore not within the reach of £he Pennsylvania fair-trade law, if the resale was to a customer residing outside Pennsylvania Sunbeam Corp. v. Wentling, 3 Cir., 1950, 185 F.2d 903. When Congress created the McGuire Act, it indicated that one of its express purposes was to “overrule” the Wentling decision, and to permit the individual states to apply their fair-trade laws to interstate shipments such as those involved in Wentling. See H.R.Rep. 1437, 82d Cong., 2d Sess. 6 (1952) And subsequent to the passage of the McGuire Act several courts have held that interstate shipments are within the reach of the fair-trade law of the state where the seller is located, thereby implying that the resale contemplated by the McGuire Act takes place in that state. See, e. g., General Electric Co. v. Masters, Inc. (Raxor Corp. v. Goody), 1954, 307 N.Y. 229, 120 N.E.2d 802 certiorari denied, 348 U.S. 863, 75 S.Ct. 88, 99 L.Ed. 680; Sunbeam Corp. v. MacMillan, D.C.D.Md.1953, 110 F.Supp. 836.
To also permit the state of ultimate destination where the consumer resides to apply its fair-trade law to such inter*690state transactions as those now before us would logically require a holding that under the McGuire Act a resale can take place in two jurisdictions. It is my belief that the Congress did not intend that New York State can enforce its Feld-Crawford Act both against resident sellers, as has been done in Raxor Corp. v. Goody, and also against a nonresident seller as by the decision below. For such an anomalous result I find no. authority in the language or history of the McGuire Act. In fact, its somewhat equivocal legislative history tends to support the opposite conclusion, that the seller is subject to the applicable law of but one state. See 98 Cong.Rec. 4952-54 (1952); Revere Camera Co. v. Masters Mail Order Co., D.C.D.Md.1955, 128 F.Supp. 457, 463; Bissell Carpet Sweeper Co. v. Masters Mail Order Co., D.C.D.Md.1956, 140 F.Supp. 165, 170-178, affirmed 4 Cir., 1957, 240 F.2d 684.
In view of my understanding of the McQuire Act, I do not find that the New York Feld-Crawford Act has any applicability to the situation before us here. Congress, in passing the McGuire Act, exempted resale price maintenance agreements from the coverage of the federal anti-trust laws by permitting the individual states to enact fair-trade legislation. But that exemption can be availed of only by the state that the McGuire Act designates as the state of resale, i. e., the state where the retailer is located. Hence the New York Feld-Crawford Act, in my judgment, cannot be enforced against this defendant, located in the District of Columbia, on the facts in this case; and, as pointed out by Judge CLARK, the fact that the defendant is owned by a resident of New York State does not make that Act any more applicable to it than if the defendant were owned by a resident of some other state.
And I agree with Judge CLARK that the New York contacts of the defendant stressed by the trial court also are irrelevant to our problem of construing the McGuire Act. Nor do I see any reason for treating the defendant as a mere dummy corporation for its New York parent. The defendant conducts an extensive retail business in Washington and must be regarded as a separate corporate entity selling the plaintiff’s merchandise in that jurisdiction.
Judge CLARK interprets the language of the McGuire Act to make the resale price maintenance statute, if any, of the state where the title passes to goods sold in interstate commerce the only state statute applicable to the transaction. Such an interpretation of that Act permits sellers and buyers to “pick their own law,” despite the law of the state where one or both of them may be located.
Clearly a sale or contract of sale can be made in one place and passage of title to the goods being sold may occur elsewhere. Moreover, the place where, or the time when, the title passes can be arranged at the will of the parties. Thus under the approach adopted by Judge CLARK it would be possible, despite Raxor v. Goody, supra, for a seller located in a fair-trade jurisdiction to avoid the application of the fair-trade law of that state by arranging for title to pass in a non-fair-trade jurisdiction where the buyer was located. Or by agreement of the parties, even though both seller and buyer reside in the same or in different fair-trade jurisdictions, title to the goods being sold can be arranged to pass in a free-pricing jurisdiction if the jurisdiction chosen has a direct and substantial relation to the transaction.
Judge CLARK would point out that if my interpretation of the McGuire Act is adopted it will be difficult in future cases “to know how much paraphernalia a seller must have in a state to be ‘located’ there.” Surely, realistic criteria for determining the location of a retailer will logically develop as the future cases may require that development. I would here hold only that this defendant-retailer is located within the District of Columbia and therefore beyond the reach of the fair trade law of New York. That is the issue before us to decide.

. This phrase was separable from the provisions of the Cole Amendment providing for a federal cause of action. Being so separable, it could easily have been inserted in the McGuire Act which leaves enforcement to the several states. It is a fair conclusion, therefore, that in situations where the transaction is in interstate commerce Congress did not intend to permit the state in which the goods are delivered to be able to enforce its local resale price maintenance statute.