161 F. 219 | N.D. Ill. | 1908
The bill herein is filed for an injunction, restraining the defendant and its representatives from “buying, selling, procuring, disposing of, or otherwise dealing or trafficking in the trailing stamps issued by the Sperry & Hutchinson Company * * * and from advertising so to do.” The cause is now before the court on a motion for a preliminary injunction, and for other relief. Complainant is engaged in the business of manufacturing and selling to its customers what are known as trading stamps. These are supplied under and subject to the terms of a written contract, which reads as follows, viz.:
“This agreement, made the-day of ——■—, 190 — > by and between the Sperry & Hutchinson Company, a corporation of the state of New Jersey (hereinafter called the ‘Company’), party of the first part, and --, a --— of --, doing a general--business at ---- street,--, state of -, party of the second part, Wttnessoik: Tliaf: in consideration of the mutual promises and agreements hereinafter contained, said parties agree as follows: Said company agrees to advertise in the directory of its ‘S. & II.’ green trading stamp books distributed in the city or town of -, the name, business, and aforesaid business address of the party of the second part; to deliver to the people of said city or town said books, and explain to them how to use the same; and to redeem said stamps with goods and merchandise when presented by the customers of its subscribers iu said books in lots of nine hundred and ninety (990) stamps, and according to law, collected in the manner proscribed and subject to the conditions heroin and in said books. Said company agrees to deliver, and the party of the second part agrees to order and receive from said company, its green trading stamps, in lots of not less than - pads per lot, each pad containing - thousand stamps, and to pay upon delivery thereof, the sum of -- dollars per pad, for the use of said stamps as an advertising medium, and agrees to supply said stamps from the aforesaid business address only, as an inducement for cash trade to all persons who pay cash for purchases; to give out said stamps as follows, and not otherwise to dispose of the same without the prior consent in writing of said company, viz.: To give to each*220 1 customer ior redemption only by said comi>any one stamp for each and every ten cents represented in the retail price of merchandise, for which cash is paid by said customer. Said party of the second part also agrees to display signs furnished by said company, which read, ‘We give S. & H. green trading stamps,’ or otherwise in the windows and other prominent places about its stords, and agrees not to procure said stamps in any way exceprt direct from said company, either during the term of this contract, or at any time, and also agrees to mention favorably the use of said, stamps in all newspaper and other advertisements published by or for it; and not to use any other coupons, trading stamps, or similar device during the term of this contract, and not to join in any combination of merchants for the purpose of discontinuing the use of said company’s trading stamps. It is mutually agreed between tbe parties hereto that the. property in and title to said stamps and signs remain in the said company, and shall not in any event pass to the party of the second part, or any other person, firm, or corporation and that this agreement shall remain in force for one year from the date of its execution, and shall be considered renewed for an equal period from year to year, unless written notice to tbe/ contrary, be given by either party to the other at least thirty (30) days prior to the yearly periods of expiration; and, provided such notice be given by said company, it may thereafter omit from its subsequently printed directory and advertisements the name of the party of the second part. It is mutually understood and agreed that this contract is made for the benefit of tbe subscriber’s customers as well as of tbe parties hereto.
“In witness whereof, the parties hereto have executed the foregoing agreement the day and year above written.
“The Sperry & I-Iutchinson Company,
“By-.
“N. B. — No agent has authority to alter the foregoing agreement in any way. No alteration therein shall be effective unless countersigned by an officer of the company at tbe home office, 320 Broadway, New Xork City.”
Each stamp has printed on its reverse side the following, viz.:
“Property of the Sperry & Hutchinson Co. Not transferable except as provided in notice in trading stamp book.”
On the cover of the book, in large letters, are the words:
“CAUTION. THIS PAD IS NOT TRANSFERABLE.”
The method of transacting business is as follows, viz.: The stamps are delivered to merchant subscribers in pads or books of 1,000 or 5,000 each, for a certain consideration. Upon receiving the same the customer subscribes the following:
“Conditions Under Which ‘S. & H.’ Green Trading Stamps are Furnished: Solely for the advertising of the company’s subscribers, and for redemption by their customers. The title to ail Sperry & Hutchinson green trading stamps remains in the Sperry & Hutchinson Company; the subscribing merchant transfers only the right of redemption to his customers. Once issued by subscribers, tbe stamps cannot again be used for advertising purposes.”
It is alleged by the complainant, and not' disproven, that complainant and its predecessors originated this method of advertising, as it is ' termed in the bill, and that large sums of money and great labor have been expended in perfecting and popularizing it; so that at the time the bill was filed its green trading stamps had become widely known as a valuable .medium for advertising. As a part of the benefit to its subscribers, complainant causes circulars to be distributed, house to house canvasses to be made, and the attention of customers to be attracted to the subscribers’ business, thus taking the place, to a degree,
It is the essence of complainant’s business that its subscribers shall get the full benefit of its methods of advertising and assistance. Its stamps are not, in the full sense, property. Their nontransferability is an essential element of tlieir value, both to complainant and its subscribers. It may be assumed that both parties are in the transaction for profit. It is not fair to say that complainant’s only interest consists in the presentation of the stamps for redemption, if the means employed to that end result in killing the demand of subscribers for the stamps. The parties are entitled to carry on their affairs in such a way as to serve the business interests of each, so long as they are lawfully conducted. To create an unfair market for partly filled and nontransferable stamp books would have a tendency to keep purchasers from trading with subscribers until they were filled. This has been held in a number of cases instituted by complainant to protect its business. Among these are the Cases of Mechanics’ Clothing Company (C. C.) 128 Fed. 800, 1013 (same in [C. C.] 135 Fed. 833), Brady (C. C.) 134 Fed. 691, Beal (C. C.) 145 Fed. 659, Asch (C. C.) 145 Fed. 639, and Temple (C. C.) 137 Fed. 922. In addition there are unpublished opinions and decisions to the same effect by Judge Morris of Baltimore, Judge McPherson, Fas tern district of Pennsylvania, Judge Thomas, Eastern district of New York, and Judge Eacombe, Southern district of New York.
The defendant, in pursuit of its business advancement, entered upon a course of conduct logically calculated to injure complainant. It sent agents around to purchasers from complainant’s subscribers, and by various representations sought to and did induce them to exchange their incomplete stamp books for defendant’s trading stamps, taking three of complainant’s, known as “Green Stamps,” for one of its own. It does not appear what inducement was offered for the exchange, further than counsel’s statement, to the effect that defendant offered a more desirable class of goods for redemption than the green stamps ■commanded, and fixed the purchasable value of its stamps. It is also asserted that defendant made endeavors to persuade complainant’s subscribers to break their contracts, and offered inducement to that end. In fact, it is made to appear that defendant made the manipulations of complainant’s stamps, and interference in its contracts and business, a special feature of its own business, so much so that, as the record now shows, it cannot be definitely determined whether or not such injury to complainant was not the controlling motive in the plan. And all this, notwithstanding the fact that these stamps were good only for re
“It would be impracticable for the complainant to discriminate between stamps properly issued by merchants with whom it deals and other stamps which come upon the market.”
It is claimed for defendant that complainant had itself indulged in the practice of procuring the trading stamps of others, and that it does not come into court with clean hands. The evidence on this .point shows that in some instances this has been done, but that no attempt has been made by complainant to place such stamps on the market oído anything else therewith. No fraudulent intent is shown, and there are decisions which seem to approve of it. No such action has, however, been pursued toward defendant herein, and it is not in position to press this point as a defense. Camors-McConnell Co. v. McConnell (C. C.) 140 Fed. 412; Equitable Gas Light Co. v. Baltimore Coal-Tar & Mfg. Co., 65 Md. 73, 3 Atl. 108; Foster v. Winchester, 92 Ala. 497, 9 South. 83; Mossler v. Jacobs, 66 Ill. App. 571; Pom. Eq. Jur. (3d Ed.) § 399; Beekman v. Marsters (Mass.) 80 N. E. 817, 11 L. R. A. (N. S.) 201 (April, 1907). Even were the law not so, the facts in this case are not such as to justify the enforcement of the rule.
The whole case considered upon the present record, complainant is entitled to the temporary relief prayed for. I think any and all trafficking in these nontransferable trading stamps by it should be enjoined. Complainant may prepare a decree in accordance herewith.
On Rehearing.
The motion of complainant for a preliminary injunction having been argued orally before the court on the 11th day of February, 1908,