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General Electric Co. v. Gem Vacuum Stores Inc.

Decided: June 15, 1955.

GENERAL ELECTRIC COMPANY, PLAINTIFF-RESPONDENT,
v.
GEM VACUUM STORES, INC., A NEW JERSEY CORPORATION, ET ALS., DEFENDANTS-APPELLANTS



Clapp, Jayne and Francis. The opinion of the court was delivered by Clapp, S.j.a.d.

Clapp

Defendants, Gem Vacuum Stores, Inc. and its alleged officers, appeal from an interlocutory injunctive order issued at the suit of the plaintiff, General Electric Company, enjoining certain merchandising practices on their part. They are charged with unfair competition.

Gem is in the business of selling vacuum cleaners at retail; and as may be taken from the affidavits submitted below by the parties, it has from time to time during 1954 advertised for sale, at about cost to it, plaintiff's vacuum cleaners,

Model C-1, describing them as "brand new" or "brand new in factory sealed boxes," though in fact they had theretofore been superseded by Model C-2. However, so plaintiff says (in its brief), essentially Gem's entire operations consist of the selling of vacuum cleaners at retail; and since doubtless each of Gem's prospects would buy only one cleaner, the advertisement of course must have been designed for some purpose other than to sell vacuums at cost.

In any event, the charge against defendants is that through this "bait advertising," they lured plaintiff's potential customers into making contact with them for purposes of "switch-selling" and so of pirating plaintiff's good will; that is, that by false and disparaging assertions on the part of defendants as to plaintiff's vacuums, many persons answering the advertisement were persuaded by defendants to buy from Gem, not plaintiff's, but another manufacturer's vacuum at a substantially higher price. Affidavits on defendants' behalf in opposition to those on plaintiff's behalf deny some charges of disparagement and certain other matters and also disclose that since September, 1953 Gem has purchased 1,400 of plaintiff's C-1 vacuums and has sold all but 300.

The rule is that an interlocutory injunction should not issue if plaintiff's asserted rights are not clear as a matter of law. Citizens Coach Co. v. Camden Horse R. Co. , 29 N.J. Eq. 299 (E. & A. 1878), in laying out this proposition seems to have had in view rights cognizable in a law court, with which Chancery interfered only with diffidence. But under later cases the rule clearly is made to apply to all rights, whether equitable or legal in character. See Coles v. City of Newark , 95 N.J. Eq. 73, 76 (Ch. 1923), affirmed 95 N.J. Eq. 775 (E. & A. 1923); A. Hollander & Son, Inc., v. Jos. Hollander, Inc. , 118 N.J. Eq. 262, 264 (E. & A. 1935); Sneath v. Lehsten , 120 N.J. Eq. 327, 333 (E. & A. 1936). The reason for the rule today doubtless lies in the fact that an interlocutory injunction is so drastic a remedy it should be withheld (the matter usually comes up on a motion day) when the law is in doubt and no opportunity is afforded for a full study of the matter by both sides.

To this rule there are exceptions, as where the subject matter of the litigation would be destroyed or substantially impaired if a preliminary injunction did not issue. Christiansen v. Local 680 of Milk Drivers, etc. , 127 N.J. Eq. 215, 220 (E. & A. 1939); Haines v. Burlington County Bridge Commission , 1 N.J. Super. 163, 174 (App. Div. 1949); Naylor v. Harkins , 11 N.J. 435, 446 (1953). Further see Costello v. Thomas Cusack Co. , 96 N.J. Eq. 83, 90 (Ch. 1924).

But this rule and the exceptions to it are not to be looked upon as hard and fast and sharply defined in scope; rather they are but factors, among others, which must be weighed, one with another, all going to the exercise of an exacting judicial discretion as to whether or not to issue a preliminary injunction. Restatement of Torts , §§ 933 b , 936 e.

We turn then to the legal issues here. They have been briefed as though they were governed by the common law; and even in that aspect of the matter, it must be conceded (and indeed is conceded by plaintiff in an interesting brief) that the "bait advertising" and "switch-selling" raise novel questions in this State. As to the matter of injunctive relief against disparagements, see in general Restatement of Torts , §§ 624-626, 633, 933 c , 942 d , 943 b; note , 63 Yale L.J. 65, 96; Prosser, Torts , 1038 (1941); 2 Nims, Unfair Competition and Trade-Marks 827 (1947); Pound , 29 Harv. L. Rev. 640; Teller , 56 Harv. L. Rev. 180, 205; Black & Yates v. Mahogany Ass'n , 129 F.2d 227, 148 A.L.R. 841 (3 Cir. , 1941); see Judge Jayne's opinion in American Shops, Inc., v. American Fashion, etc., Inc. , 13 N.J. Super. 416, 421 (App. Div. 1951), referring to injunctive relief against disparaging the trade of a competitor. But see Voltube Corp. v. B. & C. Insulation Products, Inc. , 20 N.J. Super. 250 (Ch. Div. 1951), citing New Jersey cases (but no cases from our appellate courts), 28 Am. Jur. 312, § 119 (but see the pocket supplement), and Boston Diatite Co. v. Florence Mfg. Co. , 114 Mass. 69 (Sup. Jud. Ct. 1873) (but see Menard v. Houle , 298 Mass. 546, 11 N.E. 2 d 436 (Sup. Jud. Ct. 1937)). See

Black & Yates v. Mahogany Ass'n , 3 Cir. , 129 F.2d 227, ...


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