Corning predicates its charge of Vornado's breach of the Fair Trade Agreement between those parties upon the contention that, by increasing the number of trading stamps which Vornado from time to time issues to a purchaser of an article of food, and because such trading stamps can be used by such food purchasers either with or without cash to acquire from Vornado an article of Corning Ware, Vornado's price for such article was thereby pro tanto reduced below the minimum prescribed by the terms of its Fair Trade Agreement with Corning. Such is the effect of the stipulated facts hereinbefore found.
In Burroughs Wellcome & Co. v. Weissbard, 129 N.J.Eq. 563, 20 A.2d 445 (1941) aff'd 130 N.J.Eq. 605, 23 A.2d 396 (E. & A.1942), the New Jersey court held that the exemption of trading stamp companies from the scope of a producer fair trade program by not requiring the stamp companies to execute fair trade agreements governing the sale of the producer's product to the stamp companies, for use in redemption of trading stamps issued and/or sold by them, does not invalidate the producers fair trade agreements with retail purchasers or destroy the exemption provided by the Miller-Tydings Amendment to 15 U.S.C. § 1.
Moreover, the parties to the case at bar have stipulated, and I have found, that although Corning did not have an agreement with trading stamp companies relating to the number of stamp books to be required to secure a Corning product, it has consistently treated the operations of trading stamp companies, through which Corning products are secured by consumers in exchange for stamp books, as not being within Corning's fair trade program. Vornado's increase in the value of its trading stamp books, when used in connection with the purchase of particular items decided by Vornado to be used for promotional purposes, and its stamp redemption plan whereby merchandise may be secured for a combination of stamps and cash, enables a customer of Vornado to purchase a Corning Ware product at a price below the minimum fair trade retail price prescribed in and under Vornado's agreement with Corning. Consequently, Vornado's advertisement of Corning Ware products for a combination of cash and trading stamp books, where the value of the full book was stated at a figure in excess of $ 2.25, constituted a violation by Vornado of its minimum price agreement with Corning which entitled Corning to rescind the agreement and to refuse to permit Corning's distributors to continue to sell Corning products to Vornado.
The effect of the Miller-Tydings Amendment to the Sherman Act was to validate vertical fair trade contract systems. Schwegmann Brothers v. Calvert Distillers Corp., supra. Corning's fair trade contracts with Vornado were part of a vertical fair trade system, i.e., an arrangement of agreements between a manufacturer and the wholesalers and retailers of its products. The 1952 amendment to the Commerce and Trade Act, 15 U.S.C. § 45, known as the McGuire Amendment, provided that nothing in that section should render unlawful the exercise or enforcement of any right or right of action created by any statute, law or public policy of any state whose Fair Trade Act contains a 'nonsigner' clause. Corning's products were in fair and open competition, and therefore Corning had a legal right to refuse to sell its trademarked products to retailers except upon an agreement to resell only at fair trade prices. Such refusal to sell, for failure to agree to those conditions, did not constitute an unlawful boycott in violation of the Sherman Act. See Sunbeam Corp. v. Central Housekeeping Mart, 2 Ill.App.2d 543, 120 N.E.2d 362 (1954). Corning's Fair Trade Agreements with Vornado authorized Corning's distributors to refuse to sell Corning's products to Vornado, and Corning's agreements with distributors Lehrhoff and Schultz obligated them to refuse to sell Corning's products to retailers violating fair trade agreements between such retailers and Corning. It follows, therefore, that since Corning's Fair Trade Agreements with Vornado were valid under state and federal statutory law, their violation by Vornado justified the invocation by Corning of the penalty provisions which they contained, as well as the exercise by Corning's distributors of their contractual obligations to Corning in relation to sales of Corning's products to the contract-violating retailer.
The plaintiff Vornado has failed to sustain the causes of action set forth in its complaint against the defendants named therein. It follows, therefore, that each of the said causes of action must be dismissed and judgment entered thereon in favor of each of the defendants against the plaintiff.
Present an appropriate order.