On appeal from the Chancery Division of the Superior Court, whose opinion is reported in 19 N.J. Super. 210, certified by this court on its own motion.
For affirmance -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Wachenfeld, Burling and Brennan. For reversal -- None. The opinion of the court was delivered by Heher, J.
We have here a proceeding in equity under the New Jersey Fair Trade Act (R.S. 56:4-3, et seq.) for the recovery of damages to good will and property of $10,000 ensuing, as is said, from the advertising, offering for sale, and the sale by the defendant retail druggists at stores in Newark, New Jersey, of trademarked and branded pharmaceutical preparations and commodities produced, sold and distributed by plaintiff, a New Jersey corporation, at less than the retail prices established by plaintiff for the trade from time to time pursuant to the cited Fair Trade Act, and for an injunction against a repetition of such acts.
The Superior Court gave summary judgment in favor of defendants; and plaintiff's appeal to the Appellate Division of the Superior Court was certified here for decision on our own motion.
Unlike the case of Johnson & Johnson v. Charmley Drug Co., 11 N.J. 526, the asserted obligation of defendants to conform to the prices fixed by the plaintiff producer and distributor is grounded not in a "contract" or an "agreement" made by defendants with plaintiff or an intermediate wholesaler or distributor of plaintiff's products under a mutual price-maintenance arrangement, but rather in the "nonsigner" clause of the State Fair Trade Act classifying as actionable "unfair competition" the willful and knowing advertising, offering for sale, or the sale at less than the price stipulated in any contract entered into pursuant to the provisions of section 5 of the act, regardless of whether the actor is or is not a party to such contract. R.S. 56:4-6.
The complaint alleges that notwithstanding "notice and knowledge" of price-maintenance contracts made by plaintiff with retailers in New Jersey for the protection of plaintiff's good will symbolized by descriptive trademarks, brands and labels, defendants "offered for sale and sold the products of plaintiff at less than the minimum resale prices." And it was stipulated in the pretrial order that defendants "are not at this time parties to a fair trade contract with the plaintiff,
and the case is to be tried as if the defendants are noncontracting parties with the plaintiffs under the Fair Trade Act of New Jersey."
Sales made in disregard of the minimum price standard thus set by plaintiff are conceded; they are defended as sales in interstate commerce by noncontracting retailers who are not comprehended in the immunizing provision of the Miller-Tydings Amendment of the Sherman Anti-Trust Act. 26 Stat. 209, c. 647; 50 Stat. 673, 693, c. 690; 15 U.S.C.A., sec. 1.
This is the substance of the points made for reversal of the judgment: (1) Price maintenance "is no longer per se a violation" of the Sherman Act, and so it is requisite that there be an allegation and proof of "unreasonable" restraint of trade to bring the case within the interdiction of the Sherman Act, an issue in its very nature not determinable upon motion for summary judgment; and (2) the Interstate Commerce Clause of the United States Constitution (Article I, section VIII, paragraph 3) is not justly susceptible of a construction that will deprive New Jersey "of its right to legislate under the police power concerning economic conditions and public welfare."
Since the passage of the Miller-Tydings Amendment of August 17, 1937, "price maintenance may be valid under" the Sherman Act, and "if this is so and price fixing or price maintenance is no longer illegal ' per se,'" only "an unreasonable restraint of trade" will constitute a violation of the Sherman Act, and the issue is one for "a final hearing on the facts." Indeed, it is contended that the amendment "removed from the ' per se ' category resale price maintenance." The reasoning is that under the amendment "not all price fixing is illegal," and therefore "price fixing is no longer illegal per se," and it is now requisite that the Sherman Act be examined "not in light of the public policy ...