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Travel Agents Malpractice Action Corps v. Regal Cultural Society Inc.

Decided: February 1, 1972.

TRAVEL AGENTS MALPRACTICE ACTION CORPS, PLAINTIFF-APPELLANT,
v.
REGAL CULTURAL SOCIETY, INC., AND REGAL TOURS, INC., DEFENDANTS-RESPONDENTS



Conford, Matthews and Fritz. The opinion of the court was delivered by Conford, P.J.A.D.

Conford

The Chancery Division entered summary judgment in favor of defendants, and plaintiff appeals.

Plaintiff ("TAMAC") is an unincorporated association of 14 travel agencies, formed under authority of N.J.S.A. 2A:64-1, whose individual business operations are conducted in the northeastern part of the State. Defendant Regal Tours, Inc. ("Tours") is a travel agency operating in the same general area. Defendant Regal Cultural Society, Inc. ("Cultural Society") is a corporation apparently having a close working relationship with Tours. Plaintiff contends that the sole or dominant purpose of Cultural Society is to sell its members cut-rate air travel on charter flights arranged for by

Tours and that the public is solicited to become members for that and no other bona fide organizational purpose; that Tours has organized and runs Cultural Society for such purposes and its own profit, and that these purposes, objects and activities are in violation of a contract among International Air Transport Association ("IATA"), travel agents authorized to issue airline tickets for transport on member airlines of IATA (including members of TAMAC and Tours) and such member airlines.

Plaintiff alleges that the contract violation by Tours consists of the scheduling and arrangement of charter flights "by non-affinity groups," contrary to express provision of the IATA agreement "and to the great detriment of all travel agents within the customer area of the plaintiff's organization members."

By reason of the foregoing plaintiff sought an injunction and damages.

By amendment of the complaint plaintiff charged that in violating the IATA agreement defendants were in contravention of (a) the New Jersey Fair Trade Act (actually denominated "Fair Sales Act")), N.J.S.A. 56:4-1 et seq. , and (b) the regulations of the federal Civil Aeronautics Board ("C.A.B.") as they pertain to charter flights. That agency has promulgated regulations of charter flights basically prohibiting charter flight operations such as those plaintiff attributes to defendants except where exemptions are granted by it; and plaintiff further contends on this appeal that when a travel agency so conducts itself it becomes, in effect, an indirect air carrier, and, if not certificated by the C.A.B., as defendants are not, is in violation of the Federal Aviation Act of 1958 (49 U.S.C.A. ยง 1301 et seq.)

Defendants filed an answer generally denying the allegations of the complaint and setting forth separate defenses which, so far as material on this appeal, can be conveniently discussed in terms of the reasons stated by the trial court in granting the motion for summary judgment in favor of defendants and relied upon by them on this appeal.

We need not discuss in detail the contesting affidavits of the parties filed below in relation to the issue of whether Tours directs and controls the operations of Cultural Society and whether Cultural Society was formed or is operated bona fide for purposes other than promoting travel of its members, or, to the contrary, functions for the sole purpose of promoting the travel of its members, including air travel, on a discount basis through arrangements effected by Tours. We find genuine issues of fact to be presented in those regards.

The trial court gave the following reasons for its determinations:

1. Plaintiff had no standing to bring the suit in relation to any of the causes of action pleaded because it was an unincorporated organization and any injury to plaintiff's members was actionable only in a suit brought by them individually and not by suit of an organization.

2. Plaintiff was not entitled to sue as a third-party beneficiary of the IATA contract with Tours because not intended as a beneficiary thereof.

3. There was no cause of action under the Fair Trade Act because plaintiff was not a producer or distributor of anything, and more particularly, not of a "commodity," within the intent of N.J.S.A. 56:4-6.

4. No cause of action lay for redress of grievance arising out of alleged violation by defendants of regulations of the Civil Aeronautics Board since plaintiff failed to exhaust the administrative remedies provided for by the Federal Aviation Act; further, that the special expertise of the agency made prior resort to that avenue of relief appropriate and necessary. We proceed to a discussion of the issues raised.

I. -- Breach of Contract

It appears clear to us, and plaintiff practically concedes, that admeasurement by a judge or jury of damages caused any of plaintiff's members through defendant's activities would be a practical impossibility. While it is readily understandable that in all probability competing travel agents

in a given area selling air transportation at lawful rates would sustain losses through the competition of another agent selling the same market at illegally low rates, the incidence or amount of the particular damage of any one or more of plaintiff's members would be speculative to the point of precluding a valid specific award.

Moreover, the members are not plaintiffs herein, and the actual plaintiff is in no sense an intended beneficiary of the IATA contract even if its members are to be regarded as such. While we are hereinafter recognizing the right of organizations like plaintiff to represent their members in certain matters of collective interest, we know of no authority for permitting an organization to sue for contract damages when the parties to the contract are only the individual members of the organization in their individual capacities.

We therefore agree with the trial court in dismissing the complaint so far as based upon alleged breach of the IATA contract.

II. -- Fair Trade Act

Plaintiff contends that the rates charged by airlines for air travel are governed by the Fair Trade Act and that defendants' reduced rate practices, since contrary to the IATA agreement, violate that act and are actionable thereunder. That act provides that no contract "relating to the sale or resale of a commodity which bears * * * the trade-mark, brand, or the name of the producer or owner of such commodity" shall be deemed in violation of any New Jersey law by reason of inclusion therein of any of certain specified provisions. N.J.S.A. 56:4-5. It also provides that the willful sale or advertising of any "commodity" at less than the price stipulated in any such contract as is described in section 56:4-5, whether the person so advertising or offering ...


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