Opinion
May 4, 1949. —
June 7, 1949.
APPEAL from an order of the circuit court for Milwaukee county: DANIEL W. SULLIVAN, Circuit Judge. Affirmed.
Fred R. Wright of Milwaukee, for the appellant.
For the respondent there was a brief by Quarles, Spence Quarles, attorneys, and Arthur Wickham and Edmund W. Powell of counsel, all of Milwaukee, and oral argument by Mr. Wickham.
This action was commenced on November 19, 1948, by the plaintiff Calvert Distillers Corporation, to enjoin the defendant Charles J. Goodman from violating the provisions of certain so-called Wisconsin Fair Trade Act contracts and to recover damages sustained by the plaintiff by reason of such violations. The order in question was entered on December 13, 1948. Paragraphs 1 and 2 of the plaintiff's complaint relate to the residence and status of the parties. Paragraphs 3, 4, 5, 6, 7, and 8 are set out in the margin.
"3. That the practice whereby retailers of liquor distributed by the plaintiff reduce the resale prices of such liquors is injurious to the good will of the plaintiff.
"4. That prior to November 15, 1940, plaintiff, pursuant to the provisions of sec. 133.25 of the Wisconsin statutes, began the practice of selling its products, including those hereafter mentioned, exclusively under contracts known and referred to as `fair-trade contracts,' and that by virtue of said contracts it was agreed that said products would not be sold at prices below those periodically set out in plaintiff's price lists.
"5. That defendant, as plaintiff is informed and believes, on and about November 15, 1940, and on various occasions thereafter, was advised that said products were to be sold at retail only in accordance with said fair-trade contracts and in accordance only with plaintiff's consumer's price lists; that defendant has secured substantial quantities of said branded and trade-marked liquors since being advised that said products were to be sold only in accordance with said fair-trade contracts and only in accordance with plaintiff's consumer's price lists.
"6. That defendant has wilfully and knowingly advertised, by advertisements appearing in the public press and otherwise, and he and his agents and servants have wilfully and knowingly offered for sale and have sold plaintiff's said products at prices less than those set forth in its latest consumer's price list; and that in an advertisement which appeared in the Milwaukee Journal under the date of November 18, 1948, and in a similar advertisement which appeared in the Milwaukee Sentinel under the date of November 19, 1948, defendant advertised one of plaintiff's said liquors, to wit, Calvert Reserve, at the price of $3.29 a fifth, and also set forth that the regular price thereof was $4.10, which said regular price of $4.10 was in fact the minimum price for the sale of a fifth of said liquor in accordance with plaintiff's latest consumer's price list.
"7. That plaintiff has protested to defendant against said price-cutting and said other improper and unlawful practices; that defendant nevertheless has continued with knowledge to offer for sale and to sell said branded liquors at prices less than those set forth in plaintiff's latest price list and has advised plaintiff that he will continue to do so.
"8. That each and all of said products are in fair and open competition with commodities of the same general class produced by others; that plaintiff has sustained substantial financial damage through the loss of good will among its customers, including retailers who purchased some of its products from distributors, by reason of defendant's said practices; that defendant threatens to continue said practices; and that plaintiff's remedy at law is inadequate, since its damage cannot be accurately computed."
Upon the summons, the verified complaint, and the affidavit of Alfred B. Chandler, state manager of the plaintiff, an order was issued on November 19, 1948, requiring the defendant to show cause why the court should not grant a temporary injunction restraining the defendant, his servants, employees, and attorneys, pending the final hearing of this cause, from directly or indirectly advertising for sale at retail, offering for sale at retail, or selling at retail any of plaintiff's products at prices less than those fixed by plaintiff in its latest consumer's price list. It was further ordered that until the determination of this order to show cause "the defendant, his servants, employees, and attorneys, be and they are hereby restrained and enjoined from advertising, offering for sale, or selling any of said products at prices less than those set forth in said latest price list." This order to show cause was returnable November 26, 1948, at two o'clock p.m. The papers upon which the order to show cause was issued were filed in the circuit court of Milwaukee county, November 23, 1948. The order to show cause was accompanied by the customary bond in the sum of $3,000.
Upon motion of the defendant the court issued an order requiring the plaintiff to show cause on November 22, 1948, at three o'clock p.m., why the restraining order issued November 19, 1948, should not be vacated and set aside. The motion of the defendant to vacate the restraining order of November 19, 1948, and the order to show cause of the plaintiff why a temporary injunction should not be granted herein, came on for hearing before the court on the 23d day of November, 1948. On the 13th day of December the court entered an order enjoining "the defendant, his attorneys, agents, servants, and employees temporarily and during the pendency of this suit and until judgment is entered herein from selling, offering for sale, and advertising any products of the plaintiff at prices below those set forth by plaintiff in its latest price lists." And the court further ordered that defendant's motion to vacate and set aside the restraining order of November 19, 1948, be denied. From the order entered on the 13th day of December, 1948, the defendant appeals. Further facts will be stated in the opinion.
While the appeal is from the injunction pendente lite of December 13, 1948, and from that part of the order which denied defendant's motion to vacate the ex parte restraining order issued on November 19, 1948, the questions for decision are really presented by the appeal from that part of the order of December 13, 1948, which granted a temporary injunction pending the final determination of the action. The restraining order of November 19, 1948, was by its terms effective only until the determination of the order of November 19, 1948. A further order having been entered on December 13th, the order of November 19th was superseded and no longer of any force or effect. Ritholz v. Ammon (1942), 240 Wis. 578, 4 N.W.2d 173. The answer not having been served until December 13, 1948, and not filed until December 14, 1948, it was not before the court on the 23d day of November, 1948, when the hearing was had. The matter therefore stands upon the complaint and the affidavits filed in support of and opposing the motion heard on November 23, 1948.
The appellant contends that the trial court abused its discretion in granting the injunction pendente lite. Appellant argues that the restraining order cannot be sustained because the essential allegations of the complaint must be positively stated. The material parts of the complaint have already been set out.
It appears from paragraph 4 that some time prior to November 15, 1940, the plaintiff began the practice of selling its products, including those hereinafter mentioned, exclusively under contracts known and referred to as fair-trade contracts, and that by virtue of said contracts it was agreed that said products would not be sold at prices below those periodically set out in plaintiff's consumer's price list. We are at a loss to understand how allegations could be more positively and clearly stated.
In paragraph 6 of the complaint it is alleged that the defendant has "wilfully and knowingly advertised . . . and wilfully and knowingly offered for sale and has sold plaintiff's said products at prices less than those set forth in its [plaintiff's] latest consumer's price list."
These two allegations state the essence of a cause of action under the Fair Trade Contracts Statute. The verification of the complaint sets out that Alfred B. Chandler is Wisconsin state manager of the plaintiff, and that,
". . . he was such agent in relation to the business out of which the cause of action set forth in plaintiff's complaint in this action arose; that he has read the above and foregoing complaint and knows the contents thereof; that the same is true of his own knowledge, except as to matters therein stated on information and belief, and that as to such matters he believes it to be true."
The allegations of paragraphs 4 and 6 of the complaint being positively stated, the exception found in the verification does not apply. It is true that the allegations of paragraph 5 are upon information and belief and could hardly be made otherwise. It is considered that the allegations of the complaint are made with sufficient positiveness to sustain the restraining order and the temporary injunction.
In response to the motion of the plaintiff to enter a temporary injunction each of the parties filed affidavits in support of their respective positions. In addition to the allegations contained in the complaint, affidavits on behalf of the plaintiff set forth that the defendant had notice of the fact that plaintiff's products were sold under the Fair Trade Act. The defendant filed an affidavit by himself in which he denied that he had such notice. It would extend this opinion to a great length to set out the substantial parts of these affidavits. It is clear from an examination of the record that the affidavits raised a question as to credibility of the affiants. The trial court found that the defendant had such notice, and there are abundant facts stated in the affidavits to support that finding.
The appellant further contends that the order appealed from granting an injunction pendente lite specified a restraint which is in excess of the statutory authority to contract. Sec. 133.25, Stats., subs. (4) and (5), provides:
"(4) Every contract containing the provisions referred to in subsection (3) shall include the provision that such commodity may be resold without reference to such contract in the following cases:
"(a) In closing out in good faith the owner's stock or any part thereof for the purpose of discontinuing delivering any such commodity.
"(b) When the goods are damaged or deteriorated in quality, and notice is given to the public thereof.
"(5) Wilfully and knowingly advertising, offering for sale or selling any commodity at less than the price stipulated in any contract referred to in subsection (3), whether or not the person so advertising, offering for sale or selling is a party to such contract, is unfair competition and is actionable at the suit of any person damaged thereby."
This contention was first raised in this case in the appellant's briefs on appeal. It was not brought to the attention of the trial court in any way. If and when the defendant intends to avail himself of the provisions contained in pars. (a) and (b) of sec. 133.25 (4), Stats., he should apply to the trial court for a modification of the temporary injunction.
The appellant further contends that the plaintiff's products in possession of the appellant were purchased by him prior to his receiving notice that they were sold pursuant to the terms of the Fair Trade Act, and therefore sec. 133.25, Stats., does not apply. We fail to find any provision in the Fair Trade Act which sustains appellant's contention. It appears, however, from the affidavits that the defendant had notice on November 19, 1948, and thereafter continued to make sales in violation of the Fair Trade Act.
The only provision in the Fair Trade Act relating to notice to an offending retailer is that he is guilty of unfair-trade competition which is actionable only if the sales are made wilfully and knowingly. The defendant did not challenge the sufficiency of the complaint. While the court did not make format findings it must have considered that for the purpose of deciding the motion the plaintiff had at least made a prima facie case of liability of the defendant under the Fair Trade Act, and therefore had sold plaintiff's products in violation of the terms of the Fair Trade Act knowingly and wilfully.
Upon the whole record it is considered that the trial court did not abuse its discretion in making the order of December 13, 1948, granting the plaintiff a temporary injunction.
By the Court. — The order appealed from is affirmed.
MARTIN, J., took no part.