164 F. 803 | 6th Cir. | 1908
(after stating the facts as above). We see no substantial difference between the systems of contracts under which the Dr. Miles Medical Company is now conducting its business and that under which Dr. Hartman carried on his business as a manufacturer of Peruna, considered by this court at length in the case of Jno. D. Park & Sons v. Hartman, 153 Fed. 24, 82 C. C. A. 158, 12 L. R. A. (N. S.) 1135. That case is pending, undecided, in the Supreme Court. The complainant’s very learned counsel was the counsel for Hartman in that case, and both systems of contracts are most probably the fruit of his acknowledged skill in respect to this class o£ business arrangements. No difference whatever is suggested between the system of contracts considered in that case and those here presented, except, it is claimed, that the agreement with jobbers and wholesale dealers here involved is one of bailment or agency and not one of sale as in the Plartman Case.. If this were admitted, it does not, in our judgment, operate to legalize the “system’.’ of which that agreement is but one part. The effect of that contract with jobbers, whether it be regarded as one of sale or of agency, is to restrain jobbers from selling to any save retailers licensed by complainant, and to restrain retailers from selling for resale to any save those licensed to buy or to persons who buy for consumption only, and to none, by either jobber or retailer, except at a price imposed by the manufacturer. The confessed object of this plan or system is to obtain a price to the jobber and to the retailer unaffected by any competition between them. The scheme is one to enhance or maintain prices by eliminating all possibility of competing rates between either jobbers or retailers, and is quite as' effectual in its results as if the contract with the jobber was plainly one of sale.
But we are not disposed to concede that the contracts with jobbers are contracts of bailment. There are too many features which seem inconsistent with a mere agency or commission agreement. All the responsibility of an owner seems cast upon the so-called “consignee.” He is not given the right to return goods unsold; that can be done only upon the cancellation of the contract and demand for return. The
This case must, after all, turn upon whether there is such identity of character between the statutory monopoly of articles made under a valid patent or copyright and articles made according to some private formula as to exempt them from the principles which apply to contracts which tend to create a monopoly or restrain trade when the subject is an article not made under .a patent or copyright or secret formula. A distinction exists between the extent of the protection granted by the patent and 'copyright statutes, and the copyright statute has been held “not to create the right to impose, by notice, a limitation at which a book shall be sold at retail by future purchasers, with whom there is no privity of contract.” Bobbs Merrill Co. v. Straus (decided by the Supreme Court, June 1, 1908) 210 U. S. 339, 28 Sup. Ct. 722, 52 L. Ed. 1086. This distinction has been drawn since the decision of the cases we refer to, and since the decision of the Harttnan Case above referred to. There are decisions by most respectable courts which hold that articles, such as proprietary medicines, are outside of all rules and statutes which forbid contracts in restraint of trade, because they are made under a secret formula. Some, if not most, of these decisions have been made in cases in which the Dr. Miles .Medical Company has been a party. They ate cited and commented
We need not repeat the argument by which we reached the conclusion that the' system of contracts which Hartman sought to enforce through the injunctive power of a court of equity was obnoxious not only to the statute of Congress against restraints and monopolies in respect of interstate trade but inimical also to the reasonable restraints which at common law may be imposed as ancillary to a principal contract. All that we said in respect to the Hartman system is applicable here. The case falls directly within the reasoning and decision of that case in respect to every aspect of the question, and the decree sustaining the demurrer interposed by the appellees must be affirmed.
“Consignment Contract. Wholesale. The Dr. Miles Medical Company.
“This agreement made by and between the Dr. Miles Medical Company, a corporation, of Elkhart, Indiana, hereinafter referred to as the proprietor and-■ hereinafter referred to as the consignee, witnesseth:
“That the said proprietor hereby appoints said consignee one of its wholesale distributing agents, and agrees to consign to such consignee for sale for the account of said proprietor such goods of its manufacture as the proprietor may deem necessary, the title thereto and property therein to be and remain in the proprietor absolutely until sold under and in accordance with the provisions hereof, and all unsold goods to be immediately returned to said proprietor on demand and the cancellation of this agreement. Said goods to be invoiced to consignee at the following prices:
“Medicines, of which the retail price is $1.00; $8.00 per dozen.
“Medicines (if any) of which the retail price is 50 cents; $4.00 per dozen.
“Medicines, of which the retail price is 25 cents; $2.00 per dozen.
“Freight on all orders, the Invoice price of which amounts to $100.00 or more, to be prepaid by the proprietor; otherwise, freight to he paid by consignee.
“Said consignee agrees to confine the sale of all goods and products of the said proprietor strictly to and to sell only to the designated retail agents of said proprietor as specified in lists of such retail agents furnished by said proprietor and alterable at the will of said proprietor, and to faithfully and promptly account and pay to the proprietor the proceeds of all sales, after deducting as full compensation for all services, charges and disbursements a commission of ten per cent of the invoice value, and a further commission of five per cent on the net amount of each consignment, after deducting the said ten per cent commission, on all advances on account remitted within ten days from date of any consignment, it being agreed between tlie parties hereto that such advances shall in no manner affect the title to such goods, which title shall remain in the proprietor as if no such a dvances had been made; provided that such advances shall be repaid to said consignee should the said proprietor terminate this agreement and the return of any unsold goods on which advances have been made. Said consignee guarantees the payment for all goods sold under this agreement and agrees to render a full account and remit the net proceeds on the first day of each month of and for the sales of the month preceding. Failure to make such accounting and remittance within fen days from the first of each month shall render the whole account payable and subject to draft, but the proceeds of such draft shall not affect the title of any unsold goods which shall remain in the proprietor until actually sold, as herein provided.
“It is further agreed that the consignee shall furnish the proprietor from time to time upon demand full statements of the stock of goods of the proprietor on hand on any date specified and that a failure to furnish such statements within ten days from date of such demand shall bo a sufficient cause for tbe cancellation of this agreement, and a demand for the return of the consigned goods.
*808 “It is further agreed that the proprietor will cause each retail package of its goods to be identified by a number and said consignee hereby agrees to furnish the said proprietor full reports upon proper cards or blanks furnished by said proprietor of the disposition of each dozen or fraction of Such goods by. means of the identifying numbers, specifying the names and addresses of the retail agents to whom such goods have been delivered anfi the dates of such delivery, and to send such reports to said proprietor at least semi-monthly, and at any other time on the request of said proprietor.
“It is understood and agreed between the parties hereto that the commissions herein specified shall not be considered as earned by said consignee upon, any goods of said proprietor which shall have been delivered to dealers not authorized agents of said proprietor, as per list of such agents, or upon any goods .whose disposition by said consignee shall not have been properly reported as herein provided, or sold at prices less than the prices authorized, and that said consignee shall not credit any such commissions when making remittances on consignment account provided notice has been given by said proprietor that such commissions are unearned; and that if such unearned commissions have been deducted by said consignee in making advance payments or monthly remittances on account they shall be charged back to said consignee and credited and paid to said proprietor. It is understood that violation or non-observance of any provision hereof by the consignee shall make this agreement terminable and all unsold goods returnable at the option of the proprietor.
“It is agreed that the goods of said .proprietor shall be sold by said consignee only to the said retail or wholesale agents of said proprietor, as per list furnished, at not less than the following prices, to-wit:'
“Medicines, of which the retail price is $1.00; $8.00 per dozen.
“Medicines (if any), of which the retail price is 50 cents; $4.00 per dozen.
“Medicines, of which the retail price is 25 cents; $2.00 per dozen.
“Provided, that said consignee may allow a cash discount not exceeding one per cent, if paid within ten days from date of invoice, and that when sales at one time and at one invoice, amount to $15.00 or more, the said consignee may allow three per cent trade discount, and if said purchase amounts to $50.00 or more, five per cent trade discount, all without cost to the proprietor,' and if such $50.00 quantity shall be shipped direct to the retail purchaser from the laboratory of the said proprietor, on the order from the said wholesale distributing agent, freight will be prepaid by the proprietor, but not otherwise.
“This contract will take effect when the original, duly signed by the consignee, has been received and accepted by the Dr. Miles Medical Company, at Elkhart, Indiana.
“Done under our hands-A. D., 19Q7. .
(Fill in date- on above line.)
“The Dr. Miles Medical Company.
“Wholesale dealer. Sign your name on above line. Original return in enclosed envelope.”
“Retail Agency Contract.
“The Dr. Miles Medical Company.
“This agreement between the Dr. Miles Medical Company of Elkhart, Indiana, and - of -, Retailers named on above line, - —■ Town, —'- State, hereinafter referred to as the retail agent, wit-nesseth:
“Appointed Agent.
“The said Dr. Miles Medical Company hereby appoints said retail dealer as one of the retail distributing agents of its proprietary medicines and agrees that said retail agent may purchase the proprietary medicines manufactured by said Dr. Miles Medical Company (each retail package of which the said company will cause to be identified by a number) at the following prices, to-wit:
*809 “Wholesale Prices.
“Medicines, of which the retail price is $1.00; .$8.00 per dozen.
“Medicines, of which the retail price is 50 cents; $4.00 per dozen.
“Medicines, of which the retail price is 25 cents; $2.00 per dozen.
“Quantity Discounts.
“Provided that when purchasers at one time and on one invoice amount to $15.00 (or more), wholesale distributing agents are authorized to allow three per cent trade discount; if such purchase amounts to $50.00 (or more) live per cent trade discount will be allowed, and if such $50.00 quantity be shipped direct to tlie purchaser from the laboratory of said Dr. Miles Medical Company for the account at such wholesale agent, freight will be prepaid, but not otherwise.
“Full Price.
“In consideration whereof said retail agent agrees in no ease to sell or furnish tho said proprietary medicines to any person, firm or corporation whatsoever, at less than the full retail price as printed on the packages, without reduction for quantity; and said retail agent further agrees not to sell the said proprietary medicines at any price to wholesale or retail dealers not accredited agents of tho Dr. Miles Medical Company.
“Violation.
“It Is further agreed between the parties hereto that the giving of any article of value, or the making of any concession by means of trading stamps, cash register coupons, or otherwise, for the purpose of Reducing the price above agreed upon shall bo considered a violation of this agreement, and further it is agreed between the parties hereto that the Dr. Miles Medical Company will sustain damage in the sum of twenty-five dollars ($25.00) for each violation of any provision of this agreement, it being otherwise impossible to fix the measure of damage.
“This contract will take effect when a duplicate thereof, duly signed by tho retail agent, lias been received and approved by the Dr. Miles Medical Company, at its office at Elkhart, Indiana.
“Done under our hands- — , A. D., 1907.
(Fill in date on above line.)
“The Dr. Miles Medical Company.
“Retail dealer, sign your name on above line in ink.
“To retail dealer:
“Paste printed label, giving name and address, that your name may be correctly listed.
“Duplicate. Keep for reference.”