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ROGERS-KENT, INC., v. GENERAL ELEC. CO.

August 26, 1957

ROGERS-KENT, INC., RESPONDENT,
v.
GENERAL ELECTRIC COMPANY, APPELLANT.



The opinion of the court was delivered by: Oxner, Justice.

August 26, 1957.

This action was brought under the Uniform Declaratory Judgments Act, Volume 1, Title 10, Chapter 24 of the 1952 Code, to determine the constitutionality of our "Fair Trade Act", sections 66-91 to 66-95, inclusive, of the 1952 Code.

This legislation was enacted in 1937. 40 St. at L. 301. It was entitled "An Act to Protect Trade Mark Owners, Distributors and the Public Against Injurious and Uneconomic Practices in the Distribution of Commodities Under a Distinguishing Trade Mark, Brand or Name."

Section 66-93, so far as material to our discussion, reads:

"No contract relating to the sale or resale of a commodity which bears, or the label or container of which bears, the trademark, brand or name of the producer, distributor or owner of such commodity and which is in fair and open competition with commodities of the same general class produced by others shall be deemed in violation of any law of the State by reason of any of the following provisions which may be contained in such contract:

"(1) That the buyer will not resell such commodity at less than the minimum price stipulated by the vendor or

"(2) That the producer or vendee of a commodity require upon the sale of such commodity to another that such purchaser agree that he will not, in turn, resell at less than the minimum price stipulated by such producer or vendee."

Section 66-94 is as follows:

"Willfully and knowingly advertising, offering for sale or selling any commodity at less than the price stipulated in any contract containing either of the provisions mentioned in § 66-93, whether the person so advertising, offering for sale or selling is or is not a party to such contract, is unfair competition and is actionable at the suit of any person damaged thereby."

The Court below held the Act unconstitutional upon the grounds (1) That it was void in its inception because inconsistent with the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note, as it then stood and the subsequent passage of permissive Federal legislation could not impart validity to it; (2) that it violated the due process and equal protection clauses of Article 1, Section 5 of our Constitution; and (3) that it was an unlawful delegation of legislative power to private individuals contrary to Article 3, Section 1.

The facts were agreed upon. General Electric Company, defendant below and appellant here, manufacturers and sells on a national scale many products, including small electrical appliances such as clocks, automatic blankets, fans, heating pads and vacuum cleaners, all of which bear its trade mark "General (GE) Electric." They are shipped from the places of manufacture to wholesale distributors who in turn sell said appliances to, amongst others, retail dealers throughout the United States. They are sold in this State in free and open competition with appliances of the same general class produced by others. General Electric has expended large sums in promoting and advertising these products and has established a valuable reputation and good will for them and its trade mark. It guarantees them against defects in material and workmanship and replaces or repairs any appliances becoming defective within the time limits specified in the guarantee. Since July, 1952, pursuant to the provisions of our Fair Trade Act, General Electric has from time to time entered into written agreements with a substantial number of retail dealers in South Carolina under which it has stipulated the minimum retail sale prices for its appliances.

The record does not disclose the source from which Rogers-Kent obtains General Electric products. Presumably they were purchased from recognized dealers or direct from General Electric Company. Be that as it may, there is no contention that Rogers-Kent was guilty of fraud or deception in acquiring these appliances.

The depression following 1929 gave impetus to the movement for legislation which would allow the fixing of minimum resale prices. California was the first State to adopt a Fair Trade act. It did so in 1931. Originally it applied only to those who signed the agreements. In 1933 the California statute was amended, making the contracts binding on all retailers who had knowledge of same, even though they had not signed such contracts. Within a few years most other States followed suit. All the acts contain provisions ...


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