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Lionel Corp. v. Grayson-Robinson Stores Inc.

Decided: April 5, 1954.

THE LIONEL CORPORATION, A CORPORATION OF THE STATE OF NEW YORK, AUTHORIZED TO DO BUSINESS IN THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
GRAYSON-ROBINSON STORES, INC., A CORPORATION OF THE STATE OF CALIFORNIA, AUTHORIZED TO DO BUSINESS IN THE STATE OF NEW JERSEY, AND GRAYSON-ROBINSON STORES, INC., A CORPORATION OF THE STATE OF CALIFORNIA, AUTHORIZED TO DO BUSINESS IN THE STATE OF NEW JERSEY, TRADING AS S. KLEIN ON THE SQUARE, DEFENDANT-RESPONDENT



On appeal from Superior Court, Chancery Division, whose opinion is reported in 27 N.J. Super. 54.

For modification -- Chief Justice Vanderbilt and Justices Heher, Wachenfeld, Burling and Jacobs. Opposed -- None. The opinion of the court was delivered by Burling, J. Heher, J. (concurring).

Burling

[15 NJ Page 194] This appeal stems from a civil action instituted for the purpose of obtaining injunctive and compensatory relief under the "nonsigner" clause of the New Jersey Fair Trade Act, R.S. 56:4-3 et seq. The complaint was filed by The Lionel Corporation, a corporation of the State of New York authorized to do business in New Jersey (hereinafter referred to as Lionel), in the Superior Court, Chancery Division. The complaint named as defendant Grayson-Robinson Stores, Inc., a corporation of the State of California authorized to do business in the State of New Jersey, and Grayson-Robinson Stores, Inc., a corporation of the State of California, authorized to do business in the State of New Jersey, trading as S. Klein on the Square (hereinafter referred to as the defendant). The Superior Court, Chancery Division, entered summary judgment for the defendant.

Lionel Corp. v. Grayson-Robinson Stores, 27 N.J. Super. 54 (Ch. Div. 1953). Lionel's appeal to the Superior Court, Appellate Division, was certified by us prior to hearing there.

Lionel manufactures and produces "toy" electric trains, parts, accessories and model railroad equipment under the brand and trade names of "Lionel" and "Lionel Trains." It exercises price regulation by means of resale price maintenance agreements, commonly termed "fair trade contracts," and has entered into agreements of that character with retailers in business in this State.

The defendant operates a nationwide chain of retail stores, including one in the City of Newark, New Jersey. The defendant, although no answer has been filed, admits that it did offer for sale, and sold, Lionel's branded and trademarked products at less than the prices stipulated in Lionel's resale price maintenance agreements, and insists upon its present right to do so. Lionel contends that the defendant has sold Lionel's "fair trade" protected products at prices as much as 25% to 30% less than Lionel's resale contract prices. This is supported by affidavits and is not controverted.

Lionel's complaint, hereinabove mentioned, asserting these matters of fact and seeking injunctive relief and compensatory damages in reliance thereon, was filed and service was effected upon the defendant. The latter thereupon moved for summary judgment (without having filed an answer to the complaint, see R.R. 4:58-2, formerly Rule 3:56-2). The defendant's motion for summary judgment asserted (a) there was no genuine issue as to any material fact challenged and the defendant was entitled to summary judgment as a matter of law, and (b) Lionel's complaint failed to state a claim upon which relief could be granted.

The Superior Court, Chancery Division, granted the defendant's motion and entered summary judgment in favor of the defendant. The opinion filed by the court expressed its findings of fact and conclusions of law. The court concluded that the complaint and affidavits filed showed palpably that there was no genuine issue as to any material fact.

Further, the trial court found that the New Jersey Fair Trade Act, R.S. 56:4-3 et seq., supra, had been held to be constitutional by New Jersey courts of last resort in reliance upon the United States Supreme Court decision in Old Dearborn Distributing Co. v. Seagram-Distillers Corp., 299 U.S. 183, 57 S. Ct. 139, 81 L. Ed. 109, 106 A.L.R. 1476 (1936), and that the Old Dearborn case, supra, had not been overruled by Schwegmann Bros. v. Calvert Distillers Corporation, 341 U.S. 384, 71 S. Ct. 745, 95 L. Ed. 1035, 19 A.L.R. 2 d 1119 (1951). However, the Superior Court, Chancery Division, determined that price adherence may be secured only by virtue of voluntary agreement and therefore compulsory adherence to resale prices stipulated by the manufacturer or producer, i.e., the adherence to such prices required on the part of a retailer who has not voluntarily become a party to the resale price maintenance agreements, such requirement attaching under the "nonsigner" provision of the New Jersey Fair Trade Act, R.S. 56:4-6, is unconstitutional.

On this appeal several questions are involved. These are grouped into four categories. Principal among these is the general question whether the "nonsigner" portion of the New Jersey Fair Trade Act, R.S. 56:4-6, supra, is constitutional. Secondarily, the questions involved include the constitutionality and application of the McGuire Act, P.L. 542, 82 nd Congress, 2 nd Session, c. 745 (July 14, 1952). Finally, the applicability of the phrase "price stipulated" as set forth in R.S. 56:4-5 and R.S. 56:4-6 under the circumstances of this case and the applicability of factual defenses (alleged lack of notice of Lionel's resale price maintenance agreements, alleged unlawful combination, i.e., "horizontal" price fixing) are included among the questions involved.

I. CONSTITUTIONALITY OF THE NEW JERSEY FAIR TRADE ACT, R.S. 56:4-3 et seq.

The Fair Trade Act is asserted by the defendant to violate the State and Federal Constitutions ...


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