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August 21, 1954

MASTERS, Inc., Defendant

The opinion of the court was delivered by: WEINFELD

Plaintiff petitions that defendant be adjudged in contempt for violating the injunctive provisions of a final decree in this action. Plaintiff is a manufacturer of electrical household appliances which are sold under its general trade mark 'Sunbeam' and an additional trade mark for specific items such as 'Coffeemaster', 'Mixmaster' and 'Shavemaster'. Its business is very substantial. In the sale of its appliances in New York plaintiff has availed itself of the New York Fair Trade Law, commonly known as the Feld-Crawford Act, *fn1" by making contracts with retailers binding the latter not to advertise, offer for sale or sell articles covered by the contracts for less than the minimum prices prescribed by plaintiff in its schedules. Defendant, a retailer in the City of New York, is a discount house which sells various household commodities including electrical appliances manufactured by plaintiff and bearing its trade marks. Under date of March 1, 1950, defendant entered into a fair trade agreement with plaintiff.

On March 28, 1950 plaintiff instituted this action for an injunction, charging defendant with violation of plaintiff's fair trade contracts with defendant and other dealers in the State of New York. On consent of the parties, a final decree was entered on November 24, 1950. Plaintiff claims on the present application that defendant has violated the following provision of the final decree:

'3. That the defendant, its respective officers, employees, servants, agents and attorneys, and all persons in active concert or participation with them, be and hereby are permanently enjoined and restrained from advertising, offering for sale or selling any commodity bearing, or the label of which bears, plaintiff's trade-mark or name at prices less than those stipulated in plaintiff's aforesaid fair trade contracts with retailers of electric appliances in the State of New York at prices less than the minimum retail prices from time to time set forth in plaintiff's current retail price list furnished by plaintiff to defendant while such fair trade contracts are in force and effect.'

 By order entered on November 2, 1953 defendant has heretofore been adjudged guilty of civil contempt for violating this decree and directed to pay a substantial sum. The order specified that it disposed of all violations up to the date of its entry 'but in the event of future violations of the order of this court of November 24th, 1950, petitioner may apply for further relief.' The order of November 2, 1953 also contained a representation by defendant that 'it will respect and abide by said injunctive order of this court.'

 The present proceeding in which plaintiff asserts that defendant has again violated the injunction arises out of occurrences since the order of November 2, 1953. In March , 1954 the principals of the defendant organized in Maryland a corporation known as Masters Mail Order Co. of Washington, D.C., Inc., which will be referred to as Masters Mail Order House. The stock ownership of Masters Mail Order House and defendant is the same and both companies have substantially the same officers. Stephen Masters is the president and Anthony Masters is the vice-president of each corporation. Masters Mail Order House has a store in Washington, D.C. from which, in addition to an over the counter business, it also fills mail orders. Some of the orders so filled originate in New York and represent sales of plaintiff's products at less than the retail prices established by plaintiff in its fair trade contracts with New York retailers. The circumstances surrounding the inception and the filling of these orders and the impact in New York of the operations of Masters Mail Order House form the basis of the charge of contempt now before the court.

 Masters Mail Order House has, through a circular or 'flyer' mailed from Washington, D.C. to residents in New York and other states, offered plaintiff's articles at cut prices. Masters Mail Order House has in this fashion circularized, automatically and without solicitation, on their part, defendant's New York customers who hold so-called discount or identification cards. In addition, order blanks of Masters Mail Order House are available at defendant's New York store and have there been supplied to prospective customers with instructions that they be sent to Masters Mail Order House in Washington. The order blank states that it is subject to acceptance by Masters Mail Order House in Washington, D.C. Though at first Masters Mail Order House made shipments on both a prepaid and a C.O.D. basis, it is stated that it no longer ships unless it has received prior payment. Plaintiff claims that defendant has violated the injunction by:

 1. Organizing and operating Masters Mail Order Co. of Washington, D.C. Inc. for the express purpose of evading the injunction;

 2. Turning over its list of New York customers to that corporations;

 3. Causing Masters Mail Order Co. to advertise Sunbeam appliances to defendant's New York customers at cut prices;

 4. Furnishing customers in its New York store with order blanks to be sent to the Masters Mail Order Co. in Washington;

 5. Referring customers in its New York store to the Washington store; and

 6. Selling Sunbeam appliances to customers in New York, through the Washington store, at substantially cut prices.

 The gist of plaintiff's grievance is, then, that defendant has created and used Masters Mail Order House as a vehicle through which to circumvent the injunction in the final decree.

 It would be superfluous to restate here the development of fair trade legislation, for its complete history with references to the relevant decisions is found in the recent opinion of the New York Court of Appeals in General ...

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