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MEAD JOHNSON & COMPANY v. G-E-X INC. ALBANY (01/02/63)

SUPREME COURT OF NEW YORK, TRIAL TERM, ALBANY COUNTY 1963.NY.40003 <http://www.versuslaw.com>; 235 N.Y.S.2d 951; 37 Misc. 2d 491 January 2, 1963 MEAD JOHNSON & COMPANY, PLAINTIFF,v.G-E-X INC. OF ALBANY, DEFENDANT Whalen, McNamee, Creble & Nichols (David Sterling Williams of counsel), for plaintiff. George Myers, Louis Flato and Jesse H. Brenner for defendant. Isadore Bookstein, J. Author: Bookstein


Isadore Bookstein, J.

Author: Bookstein

 This is an action for a permanent injunction to restrain defendant from violating the Fair Trade Law of this State, to wit, article XXIV-A of the General Business Law, and is brought pursuant to section 369-b thereof.

The following facts are not disputed:

Defendant is a noncontracting retailer. The licensee of its drug department has made sales of plaintiff's products at prices below the minimum retail prices set by plaintiff, after notice of the existence of fair-trade contracts with other retailers. Defendant did not make such sales itself, but rather such sales were made by a separate corporate entity, which has a license for the drug department in defendant's establishment. Defendant, however, concedes that, if plaintiff's fair-trade agreement is valid and enforcible, it is applicable to it, where its licensee or tenant of the drug department in its establishment violates the same. (Cf. Bulova Watch Co. v. Sattler's Inc., 208 Misc. 257.)

On this basis, plaintiff has established its prima facie cause of action.

Defendant has asserted certain affirmative defenses, which it claims defeats plaintiff's right to an injunction.

The first such defense is to the effect that the prices fixed by the contract have for a long period of time been generally disregarded and violated by a large number of persons and stores selling the products in defendant's competitive area and are still doing so, and that plaintiff has failed, refused and neglected to demand that such stores maintain the prices set forth or, that plaintiff, with the exercise of reasonable diligence, should have known that such persons were making such sales.

The record is barren of any proof by defendant of actual knowledge on the part of plaintiff of violations by retailers, which it did not seek to halt promptly. The only proof on that subject is the discovery by plaintiff of occasional violations, and in each such instance it resorted to appropriate steps to obtain compliance, without resorting to legal action; and that, where such efforts were unsuccessful, it instituted legal action against the offenders and obtained injunctions either by consent or by default.

The next defense is that plaintiff has failed to enforce its fair-trade contract uniformly and thus has discriminated against some and in favor of others.

The evidence fails to sustain that defense. It is true that after this action was started, defendant had two shoppers make some purchases in some retail drugstores in the tri-city area, at prices below the minimums fixed. Such sales were made without plaintiff's knowledge. Promptly upon hearing thereof, plaintiff's representative called upon the retailers involved, all but one of whom, who was not available, testified upon the trial.

In each of these cases, the articles in question were on the shelves of the store with the retail price marked on the containers either in crayon or on pasters affixed thereto. The prices thus appearing were the minimum fair-trade prices in existence at the time that the containers were marked and placed upon the shelves. Periodically, plaintiff issues supplemental price lists, showing changes in the minimum prices. In each of the instances referred to, there was a failure or omission to make a correction in the prices affixed to the containers of the product, in accordance with the supplemental price list.

Upon the error being called to the attention of the retailers, they acted promptly to correct the situation. It is clear that in not one of the instances referred to was there a willful and intentional violation by the retailer. There was simply human error, easily understandable when one considers the vast number of small packages on the shelves of a retail drugstore.

Interweaved with these defenses is the defense of abandonment of plaintiff's rights by failure to have a ...


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