Lumber Mills Company

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IN Tile MATTER OF LUMBER MILLS COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO Tile ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2196. Complaint, May 4, 1936-Decision, Dec. 1, 1936 Where a corporation engaged in the distribution and sale of sash, windows, doors, molding, and mill work, In substantial competition with others likewise thus engaged, and also with those engaged in manufacturing, distributing and selling such products, and Including among its said competitors many who do not manufacture the products dealt In by them or in any way represent themselves as manufacturers of such products, and many who manufacture, distribute, and sell such products made from the botanical "Pinus ponderosa," and who do not in any way represent said products as actually made from the botanical "Pinus strobus," or white pine, but truthfully represent the same as made from the wood of and from which they are in fact made-- (a) Represented, through use of word "1\Iills" in Its corporate name, displayed and featured in its catalogs and price lists and on its letterheads, order blanks, invoices, and other literature, and through a design displaying and fentmlng said word, and statement that it was "offering these remarkable ''alues at this time to kerp our factory busy during the winter months," etc., that it owned, operated, or controlled a mill wherein lumber products were converted or made into sash, windows, doors, molding, and similar mill work, notwithstanding fact it was not, as understood by trade and purchasing public generally, such a manufacturer, with which a substantial portion of wholesale and retail purchasers of such products prefer to deal direct, as thereby securing them, in their belief, closer prices, superior quality and other advantages, as compared with dealing through a selling agency or middleman; and (b) 1\Inde use of words "white pine" in catalogs and price lists to designate wood from which many of the products sold by It were made, notwithstand- Ing fact wood In question was the botanical ''Pinus pondcrot;a," obtained from the species native to the mountainous region of the Pacific Coast, and was not the substantially more costly and generally preferred commercial white pine, or botanical "Pinus strobus," to which, iu softness, ease o! work- Ing, ability to stay In place, relative freedom from resinous substances, durability under exposure, and uniformity, 1t was inferior; With capacity and tendency to mislead ami deceive a substantial portion of the purchasing public into the erroneous belief that said various representations were true, and with the result that, Induced. by such false and misleading statements and representations, and as a consequence of the mistaken and erroneous beliefs thus Induced, the consuming public purchased a substantial volume of Its said products and trade was unfairly diverted to It from Its competitors likewise engaged in distributing and selling similar products made from wood, and who truthfully advertise and represent the nature and character of their business and o! the wood from which their sald products are actually made: to the substantial injury of competition in commerce: Complaint 24F. T. C.

Held, That such acts and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Defore Mr. Jolvn J. J{eenan, trial examiner. Mr. J. T. 1Velch for the Commission.

Complaint Pursuant to the provisions of an Act of Congress approved September 26, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that Lumber Mills Co., a corporation, hereinafter referred to as respondent, has been and now is using unfair methods of competition in commerce as "commerce" is defined in said act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows:

PARAGRAPH 1. Respondent, Lumber Mills Co., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Illinois, with its principal office and place of business located at 11 So. La Salle Street in the city of Chicago, State of Illinois. Respondent is now, and has been for some years, engaged in the business of distributing and selling, in commerce as herein set out, sash, windows, doors, molding, and mill work made from wood. P .AR. 2. Said respondent, being engaged in business as aforesaid, causes said sash, windows, doors, molding, and mill work, when sold, to be transported from its office and principal place of business in the State of Illinois or from the place of origin of said shipment to the purchasers thereof located at various points in States of the United States other than the State of Illinois or the State of the origin of said shipment and there is now, and has been at all times since the organization of respondent corporation, a constant current of trad~ and commerce in said sash, windows, doors, molding, and mill work so distributed and sold by the respondent, between and among the various States of the United States and the District of Columbia. PAR. 3. In the course and conduct of its business, respondent )s now, and has been, in substantial competition with other corporations and with firms and individuals likewise engaged in the business of distributing and selling or of manufacturing, distributing and selling sash, windows, doors, molding, and mill work in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 4. In the course of the operation of said business, and for the purpose of inducing individuals, firms, and corporations to purchase LUMBER 1\IILLS COMPANY 107 105 Complaint its sash, windows, doors, molding, and mill work, respondent has caused catalogs and price lists to be printed and circulated throughout the various States of the United States to customers and prospective customers. In all of said catalogs and price lists the respondent has caused its corporate name "Lumber Mills Co." to be prominently and conspicuously displayed. Said corporate name containing the word "Mills," is also prominently displayed on respondent's letterheads, order blanks, invoices, and other business literature. Respondent has also adopted a design, the same consisting of the word "Lumber" in cut-out letters with a black background and the letters "MILLS CO." in considerably larger type directly thereunder, the entire design being shaped somewhat like a shield and having the general appearance of a trademark. In some of its advertising literature the respondent has also made use of the following statement: "Prices are going bigher. In the face of a rising market we are offering these remarkable values at this time to keep our factory busy during the winter months, to help employment and to help our dealer customers in combatting mail order competition."

The use of the word "Mills" in its corporate name and in the design above referred to, together with the use of statements identical with or similar to the hereinabove quoted statement serve as representations to the respondent's customers, prospective customers and the general buying public that the respondent owns, operates, or controls a mill wherein lumber products are converted or manufactured into sash, windows, doors, molding, and similar mill work. PAn. 5. Respondent does not, in fact, own, operate, or control any mill or mills for the manufacture from lumber of mill work such as windows, sash, doors, and moldings. Respondent is not engaged in the business of manufacturing and is not itself a manufacturer as those terms are understood by the trade and the purchasing public generally, but is engaged solely in a business of distribuling and selling sash, windows, uoors, molding, and mill work manufactured from lumber by others.

PAn. G. A substantial portion of the wholesale and retail purchasers ·of sash, windows, doors, molding, and mill work have expressed, and have, a preference for dealing direct with the manufacturer of products being purchased. Such purchasers believe that they secure closer prices, superior quality and other advantages in dealing direct with the manufacturer rather than a selling agency or middleman. PAn. 7. In the course of the operation of said business, and for the purpose of inducing individuals, firms, and corporations to purchase its sash, windows, doors, molding, and mill work, the respondent, in its aforementioned catalogs and price lists, has made extensive use of Complaint 24F.T.C.

I the words "white pine" to designate the wood from which many of the wood products sold by it are made. The designation of said products by use of the words "white pine" in describing them serves as a representation to customers, prospective customers and the purchasing public generally that said products, to wit, sash, windows, doors and moldings are actually made of and from white pine. The wood from which said sash, windows, doors, and moldings, designated by the respondent as "white pine," are actually produced, is obtained from that certain species of tree native to the mountainous regions of the Pacific slope, botanically designated as "Pinus ponderosa." Said Pinus ponderosa does not, either botanically or by common name or in the character of lumber made therefrom, belong to that group of pine species known as white pine as set forth in Paragraph Eight.

PAR. 8. There is a certain group of pine species known both popularly and botanically as "white pines." They are a species of the genus Pinus, having certain botanical marks of distinction from other pines, and are further characterized by light, close-grained, soft wood in which the early- and late-formed portions of the annual rings or layers are not sharply defined and have thin and nearly white sap wood. Among the species of pine belonging to said described white pine groups is that botanically known as "Pinus strobus." For many years Pinus strobus has been known as a building wood, has proved its remarkable value and has gained universal esteem among the trade and the purchasing public generally under its common designation of "white pine."

The wood of Pi?us s~robu~ ~s common!~ characterized by its softness, ease of workmg, 1ts ab1hty to stay m place after being fitted, its comparative freedom :from resinous substances its durability in uses where exposed to influences of decay and b; its exceptionally high degree of uniformity of quality both locally and throuO'hout its range and in individual specimens of the species. In each 0of these respects, and especially as regards uniformity of quality the said Pinus strobus excels Pinus ponderosa. lly reason of the 'above describrd characteristics and excellence products made from the Pinus strobus have a general tendency in lumber markets to command, and in general have commanded, a substantially higher price than products made from Pinus ponderosa. A substantial portion of the purchasing public have expressed, and have, a preference for products made from genuine ·white pine over products made from Pinus ponderosa or any other species of wood.

PAR. 9. 1\fany of the re!"pondent's competitors who manufacture, distribute and sell sash, windows, doors, and molding and other wood LUMBER MILLS COMPANY 109 105 Findings products, including lumber, made from Pinus ponderosa do not in any way represent that said products are actually made from Pinus strobus or white pine but truthfully represent said products to be made from the wood of and from which they are actually made. :Many of respondent's competitors who distribute and sell sash, windows, doors, moldings and similar mill work do not manufacture the products sold by them and do not in any way represent that they are the manufacturer of said products.

PAR. 10. Each and all of the false and misleading statements and representations made by the respondent in designating itself as a manufacturer by use of the word "Mills" in its corporate name and otherwise and in designating or describing the wood from which its sash, windows, doors, and moldings are made as being white pine or Pinus strobus, as hereinabove set out, in its catalogs, price lists and other advertising literature, i1i offering for sale and in selling its products was, and is, calculated to, and had, and now has, a tendency and capacity to mislead and deceive a substantial portion of the purchasing public into tho erroneous belief that all of said representations are true. Further, as a direct consequence of the mistaken and erroneous beliefs, induced by the acts, advertisements and misrepresentations of the respondent, as hereinabove detailed, a number of tho consuming public have purchased a substantial volume of respondent's products such as sash, windows, doors and molding with the result that trade has been unfairly diverted to the respondent from its competitors likewise engaged in the business of distributing and selling similar products made from wood who truthfully advertise and represent the nature and character of their business and the nature and character of the wood from which saitl products are actually mad('. As a result thereof, substantial injury has been, and is now being, done by respondent to competition in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 11. The above and fon'going acts, practicf's, and representations of the respondent have been and are, all to the prejudice of the public and respondent's competitors as aforesaid, and have been, and are, unfair methods of competition within the meaning and intent of Section 5 of an Act of Congress approved September 20, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes." REI'ORT, FINDINGS AS TO Tile FACTs, AND OnnEn Pursuant to the provisions of an Act of Congress approved September 20, 1914, entitled "An Act to create a Federal Trade Commis- 14G7tifJm 39-vol. 24 10 Findings 24F.T.C.

sion to define its powers and duties, and for other purposes," the Fed~ral Trade Commission, on May 4, 1936, issued and served its complaint in this proceeding upon respondent, Lumber Mills Co., charrrinO' it with the use of unfair methods of competition in commere~ i; violation of the provisions of said Act. Afrer the issuance of said complaint, and the filing of respondent's answer thereto, testimony and other evidence in support of the allegations of said complaint were introduced by James T. Welch, attorney for the Commission, before John J. Keenan, an examiner of the Commission theretofore duly designated by it, and in opposition to the allegations of the complaint by Edward M. Meany, for the respondent; and said testimony and other evidence were duly recorded and filed in the office of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said compla.int, the answer thereto, testimony and other evidence; and the Commission having duly considered the same, and being now fully advised in the premises, finds that this proceeding is in the interest of the public, and makes this its findings as to the facts and its conclusion drawn therefrom :

FINDINGS AS TO Tile Y ACTS p ARAGUArn 1. The respondent, Lumber Mills Co., was organized on January 4, 1904 under and by virtue of the laws of the State of Illinois. Its principal office and place of business is located at 11 South La Salle Street, in the city of Chicago, State of Illinois. It is now, and has been, since its incorporation, engaged in the business of distributing and selling sash, windows, doors, molding, and mill work made from wood.

\Vhen orders are received for any of the products made from wood which it sells, it causes said products to be shipped and transported from its principal place of business in the State of Illinois or from some other point where said products are manufactured ~r stored to the purchasers thereof located at various points, in States of th~ United States other than the State of Illinois, or the State from which said shipments originate. The respondent has, at all times maintained a constant current of trade in said products made fro~ wood in commerce among and between the various States of the United States and in the District of Columbia.

At all times since its incorporation, respondent has been in substantial competition with other corporations and with firms and individuals likewise engaged in the business of distributing' and selling' or of. manufact~ring, distributing and selli~g sash, wi~dows, door~: moldmg, and mill work made from wood, m commerce among' and ""

LUMBER MILLS COMPANY 111 1.05 Findings between the various States of the United States and in the District of Columbia.

PAR. 2. In order to induce the purchase of the products made from wood which it sells, respondent has caused to be printed and circulated throughout the various States of the United States to customers and prospective customers, various catalogues and price-lists. In all of said catalogues and price-lists, its corporate name, "Lumber Mills Co.," has been prominently and conspicuously displayed. The corporate name containing the word "Mills" is also prominently displayed on respondent's letterheads, order blanks, invoices and other business literature. The respondent has also adopted a design consisting of the word "Lumber" in cut-out letters with a black background and the letters "Mills Co." in considerably larger type directly thereunder. The entire design is shaped like a shield and has a general appearance of a trade-mark. In some of its advertising literature, respondent has also made use of the following statement: Prices nre going higher. In the face of a rl~ing market we are offering these remarkable values at this time to keep our factory busy during the winter months, to help employment and to help our dealer customers in combatting mail order competition.

The use of the word "Mills" in its corporate name and in the design above referred to, together with the use of statements identical with or similar to the statement, hereinabove quoted, serve as representations to the respondent's customers and the general buying public that the respondent owns, operates, or controls a mill wherein lumber products are converted or manufactured into sash, windows, doors, molding, and similar mill work.

PAR. 3. Respondent does not, in fact, own, operate or control any mill or mills for the manufacture from lumber of mill work such as windows, sash, doors, and molding. Respondent is not engaged in the business of manufacturing and is not itself a manufacturer as those terms are understood by the trade and the purchasing public generally, but is engaged solely in a business of distributing and selling sash, windows, doors, molding, and mill work manufactured from lumber by others.

PAR. 4. A substantial portion of the wholesale and retail purchasers of sash, windows, doors, molding and mill work have expressed, and have, a preference for dealing direct with the manufacturer of products being purchased. Such purchasers believe that they secure closer prices, superior quality and other advantages in dealing direct with the manufacturer rather than a selling agency or middleman.

Findings 24F. T.C.

PAn. 5. In its catalogues and price-lists, the respondent has also used the words "white pine" to designate the wood from which many of the wood products sold by it are made. This designation serves as a representation to customers, prospective customers and the purchasing public generally that said products are actually made of, and from, white pine.

The wood used in making said sash, windows, doors, and molding, designated by the respondent as being "white pine," is obtained from that certain species of tree nativ.e to the mountainous regions of the Pacific slope which is botanically designated as "Pinus ponderosa." Said Pinus ponderosa does not, either bot:tnically or by common name, or in the character of lumber made therefrom, belong to that group of pine species known as white pine.

PAn. 6. There is a certain group of pine species known both popularly and botanically as "white pines." They are a species of the O'enus Pinus, having certain botanical marks of distinction from other ~ines, and are further characterized by light, close-grained, soft wood in which the early and late formed portions of the annual rings or layers are not sharply defined and have thin and nearly white sap wood. Among the species of pine belonging to said described white pine groups is that botanically known as "Pinus strobus." For many years Pinus strobus has been known as a building wood, has proved its remarkable value and has gained universal esteem among' the trade and the purchasing public generally under its common desig-"" nation of "white pine."

The wood of Pinus strobus is commonly characterized by its softness, ease of working, its ability to stay in place after being fitted, its comparative freedom from resinous substances, its durability in uses where expose(~ to i?fluences o~ decay and by its exceptionally high degree of umform1ty of quality both locally and throucrhout its range and in individual specimens of the species. In each of"'these respects, and especiall~ as regards uniformity of quality, the said Pinus strobus excels Pmus ponderosa. By reason of the above described characteristics and excellence, products made from the Pinus strobus have a general tendency in lumber markets to command. and in general have commanded, a substantially higher price than products made from Pinus ponderosa. A substantial portion of the purchasing public have expressed, and have, a preference for products made from genuine white pine over products made from Pinus ponderosa or any other species of wood.

PAn. 7. 1\fany of the respondent's competitors who manufacture distribute and sell sash, windows, doors, and moldin(J' and other wood products, including lumber, made from Pinus ponderosa do not in LUMBER MILLS COMPANY 113 105 Order any way represent that said products are actually made from Pinus strobus or white pine but truthfully represent said products to be made from the wood of ·and from which they are actually made. :Many of respondent's competitors who distribute and sell sash, windows, doors, moldings and similar mill work do not manufacture the products sold by them and do not in any way represent that they are the manufacturers of said products.

PAR. 8. The false and misleading statements and representations made by the respondent in designating itself as a manufacturer by use of the word "Mills" in its corporate name and in its advertising literature, and in designating or describing the wood. from which 1 its wood products are made as being white pine, in its catalogues, price-lists and other advertising literature, in offering for sale and. selling its products, were, and are, calculate to, and had, and now have, a capacity and tendency to mislead and deceive a substantial portion of the purchasing public into the enoneous belief that all of said representations are true. As a direct consequence of the mistaken and erroneous beliefs, induced by the false and misleading statements and· represe.ntations above referred to, the consuming public has purchased a substantial volume of respondent's products with the result that trade has been unfairly diverted. to the respondent from its competitors likewise engaged in the business of distributing and selling similar products mad.e from wood, who truthfully advertise and represent the nature and. character of their business and the nature and character of the wood from which said products are actually matle. As a result thereof, substantial injury has been, and is now being, done by respondent to competition, in commerce among and between the various States of the United States and in the District of Columbia.

CONCLUSION The aforesaid acts and practices of the respondent, Lumber Mills Co., arc to the prejudice of the public and. of respond.ent's competitors, and. constitute unfair nwthods of competition in commerce, within the intent and meaning of Section 5 of an Act of Congress, approved. September 26, 1Dl4, entitled "An Act to create a Federal Trad.e Commission, to define its powers and. duties, and for other purposes."

Order TO CEASE AND DESIST 1 This proceed.ing having been heard by the Federal Trade Commission upon the complaint of the Commission, the answer of respond- 1 Order published as modified on Feb. 24, 1937. Order 24 F. T. C. ent, testimony and other evidence taken before John J. Keenan, an examiner of the Commission theretofore duly designated by it, in support of the allegations of said complaint and in opposition thereto, and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the provisions. of an Act of Congress approved September 26, 1914, entitled, "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

It is ordered, That the respondent, Lumber Mills Co., its officers, representatives, agents, and employees, in connection with the offerin()""' for sale, sale and distribution of. sash,. windows, doors, molding,and mill work made from wood m mterstate commerce or in the District of Columbia, do forthwith cease and desist from: 1. Using the words "white pine," or the letters "w. p." alone or in conjunction with any other word or words of similar meaning to designate any lumber product made from the trees of the species Pinus Ponderosa;

2. Representing, directly or indirectly, through the use of the words "white pine" or the letters "w. p.", alone or in conjunction with any other word or letters, that sash, windows, doors, molding and mill work made from wood of the tree species Pinus Ponderosa are made from white pine;

3. Representing, directly or indirectly, through the use of the word "Mills" or any word or words of similar import and meaning in its business or advertising literature that it is the manufacturer of the products which it sells or that it owns, operates or controls any mills wherein said products are manufactured;

4. Using the word "1\fills," alone or in conjunction with other words of similar import and meaning in its corporate or trade name, unless there appear in close proximity thereto and in letters of equal prominence other words clearly indicating that it is not the manufacturer of the products which it sells and does not own operate or control the mills wherein said products are actually mad~. It is further ordered, That the respondent shall, within GO days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with this order.

PLOUGH, INC. 115 Syllabus