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OLIN MATHIESON CHEMICAL CORPORATION v. L. & H. STORES (03/17/58)

March 17, 1958

OLIN MATHIESON CHEMICAL CORPORATION
v.
L. & H. STORES, INC., APPELLANT.



Appeal, No. 61, Jan. T., 1958, from decree of Court of Common Pleas of Delaware County, Sept. T., 1955, No. 881, in case of Olin Mathieson Chemical Corporation v. L. & H. Stores, Inc. Decree affirmed.

COUNSEL

Melvin G. Levy, with him Albert Blumberg, for appellant.

Guy G. deFuria, with him J. Robert Twombly and deFuria, Larkin and deFuria, for appellee.

Before Jones, C.j., Bell, Chidsey, Musmanno and Jones, JJ.

Author: Musmanno

[ 392 Pa. Page 226]

OPINION BY MR. JUSTICE MUSMANNO

From 1952 to 1955, the Olin Mathieson Chemical Corporation, which sells arms and ammunition under the trade mark and brand name of "Winchester" and "Western" throughout the United States, entered into Fair Trade contracts with retail dealers in Pennsylvania whereby the dealers agreed to sell the plaintiff's products only at certain stipulated prices. The defendant, L. & H. Stores, Inc., in Chester, Pennsylvania, which had been selling plaintiff Mathieson's products, was not one of the dealers who had entered into such a contract. L. & H. Stores, Inc., was informed by the plaintiff, however, that it was nevertheless bound by the terms of the contracts negotiated by the plaintiff with the other dealers. The defendant ignored this notice and sold ammunition for prices less than those marked on the boxes.

The plaintiff prayed for and obtained in Delaware County an injunction enjoining the defendant from

[ 392 Pa. Page 227]

    selling the plaintiff's commodities below nationally advertised prices. The defendant appealed.

It might seem at first blush that the equities of the case are with the defendant because inherently it should have the right to sell its own goods at such prices as it pleases. However, there is more to the picture than what seems to meet the eye and reason. On June 5, 1935, the General Assembly placed on the statute books what is known as the Fair Trade Act (P.L. 266; 73 PS ยง 7, et seq.) which permits dealers to agree with producers of commodities not to sell except at prices promulgated by the producers. The Act declares it to be "unfair competition" for a dealer to cut prices below those thus agreed upon even though the dealer is not a party to the price-congealing contract. Section 2 of the Act specifically says: "Wilfully and knowingly advertising, offering for sale, or selling any commodity at less than the price stipulated in any contract entered into pursuant to the provisions of section one of this act, whether the person so advertising, offering for sale, or selling is, or is not, a party to such contract, is unfair competition and is actionable at the suit of such vendor, buyer or purchaser of such commodity." (Emphasis supplied)

The purpose of the Fair Trade Act was spelled out clearly by this Court in Bristol-Myers Co. v. Lit Bros., Inc., 336 Pa. 81, 85: "The purpose of the Fair Trade Act is obvious, it being to prevent the cutting by any dealer, of the established price of any commodity identified by the trade-mark, brand or name of the producer. ... Price cutting through 'loss leaders,' that is, by selling a certain commodity at less than cost in order to attract trade to the store where many other commodities, as well as the ...


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