Opinion by
The plaintiff, Mead Johnson & Cоmpany, sought in the Court of Common Pleas of Delaware County an injunction to prevent the defendant Chester Discount Health and Vitamin Center, Inc., from selling the plaintiff’s products at prices less than those designated in a contract which the plaintiff had entered into with other dealers in Pennsylvania, thus invoking the machinery of the Pennsylvania Pаir Trade Act (Act of June 5, 1935, P. L. 266, as amended, 73 P.S. §§7, 8).
The defendant filed preliminary objections averring that the plaintiff’s fair trade contract does not meet the requirements of the ápplicable law. The court sustained the preliminary objections, allowing the plaintiff 20 days to file an amended complaint. When the plaintiff failed to do this, thе court entered judgment in favor of the defendant. The plaintiff appealed.
The lower court, in its opinion, properly stated that the Pair Trade Act is in derogаtion of the common law and therefore must be strictly construed. There can be no doubt that fair trade acts are novel in the history of American law since they oppose the basic principle of the American economic system which envisages at all times fair and open competition with the utmost freedom in the fixing of prices. If all merchants are unhampered in price-fixing, with no one being restricted by the others, it. is obvious that no one
The Fair Trade Acts go even further. They not only deny dealers the right to sell goods at prices less than those designated by the manufacturer or wholesaler, thus protecting the manufacturer all the way through, but they offer no curb on retailers selling goods at prices higher than those designated by the manufacturer. Thus the public is victimized in that it may not obtain an article at a price less than the one specified by the manufacturer but it may be charged more than the minimum price. The net result is that the manufacturer is given armor plate protection in his minimum price ukase, but the public may be gouged tо the extent the traffic will bear.
It was the contemplation of this posture of affairs which induced the lower court to refuse the prayed-for injunction, on the basis that before the
The court pointed out the difference between the language in the contract and the language in section 1 of the Act which statеs that a fair trade contract shall not be regarded as violating any Pennsylvania Law because it contains provisions of the following character: “(a) That thе buyer will not resell such commodity, except at the price stipulated by the vendor, (b) That the buyer of such commodity require upon his resale of such commodity that thе purchaser from him agree that such purchaser will not in turn resell except at the price stipulated by the vendor of the buyer.”
The court said that “our Legislature did nоt legalize contracts which provide that the retailer would not sell ‘at a price less than the minimum retail price or resale price,’ but on the contrary it lеgalized only contracts which provided that the buyer will not resell the commodity ‘except at the price stipulated by the vendor.’ ”
This reasoning might be controlling if section 1 stood alone, but the Court overlooked other sections which are as much integral parts of the legislation as section 1. Section 2 specifies that a contract will not be deemed in violation of Pennsylvania law if it provides: “Wilfully and knowingly advertising, offering for sale, or selling any commodity at less than the price stipulated in any contract entered into pursuant
The entire Act is obviously aimed at preventing the sale of commodities at prices less than the stipulated prices, not, as the lower court states, at prices different from the stipulated price. The case of Pepsodent Co. v. Krauss Co.,
In the case at bar the court below considered section 1 as if it were separable from the rest of the Act. But section 1 is not merely the capstone of a pyramid, removable at will, it is so much an unremovable part of the pyramid that its forcible truncation would make the whole pyramid unrecognizable for what it purports to be.
do I think the variance in the language of the Pennsylvania stаtute from that of some other states which limit the stipulated price to a minimum price is any indication of a legislative purpose to require that in all fair trade сases in Pennsylvania the manufacturer or producer must, to obtain, the benefits of the Act, fix a maximum as well as a minimum price. This is demonstrated by the absence of any proscription in the Pennsylvania Act against a sale above the stipulated price, although a sale below the stipulated price is declared unlawful §2, 73 P.S. §8) ... The Miller-Tydings amеndment excepted from the Sherman Act fair trade contracts ‘prescribing minimum prices.’ If ‘a price stipulated’ in a fair trade contract, under Pennsylvania’s Fair Trade Act adopted in 1935, is something different from or less than ‘minimum prices’, then the Pennsylvania statute was never made effective by the Federal authorization. One must recoil from such a conclusion, so at war with the unbroken line of Pennsylvania authority.” (Emphasis in original decision)
The decree of the court below is reversed, with a procedendo.
Notes
See Burche v. General Elec. Co.,
Mead Johnson & Company v. West Chester Discount Health & Vitamin Center, Inc.,