The Times Sales Company, Inc., et al.

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IN THE MA TIER OF THE Tll\IES SALES CO~IPANY, IKC., ET AL.

COl\IPLAINT, FINDINGS, AND ORDER IN REGARD TO TII!lJ ALLEGIW VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED Sell. 2G, lll4 Docket 2801. Complaint, May 14, 1936.'-Decision, July 9, 1931 Where a corporation and three individuals engaged, as the case might be, as executive officers thereof in carrying on or continuing the business of said corporation or in conducting the business successor thereto, engaged in selling, by direct solicitation of purchasers in various States and in the District of Columbia, through their agents thereunto authorized, a certain encyclopedia, supplement or revision service, cet"tificate evidencing membership in the "Hureau of Research," and certain magazines, in combination, for specified sums and under specified terms, through tbe medium of printed contract forms, altered at times by certain agents through writing thereon different and other terms than those covered bY printed form and different and other magazines than those provided for and authorized- Represented and insisted to purchasers and signers of such altered con· tracts that the printed terms of the contracts put them on 110tice of selling agents' limitation of authority in such respect, and through letters, collec· tion agents, and attorneys, disa.vowed and denied the authority of the selling agents to make such alterations, and represented and insisted that such contracts were legally enforceable against signers, according to printed terms thereof, as if unaltered in writing and regardless of written alterations in printed terms appearing on face thereof, and sued and threatened purchasers and signers with suit for legal enforcement of same and for collection of the unpaid portion of the consideration, and thereby, through force, duress, and undue influence, and under fnJRe pretenses that said contracts were legally enforceable against signers without reference to written alterations in printed terms thereof, con· verted acts and conduct of said selling agents to the benefit and profit of their business, and achieved sale and distribution of said "combi· nation sale" encyclopedia deal, inclusive of books, services, and magazines: Facts being printed terms of notices set forth in contracts were not sufficient to put purchasers and prospective purchasers and signers on notice that selling agents were without authority to make alterations or changes in writing on face of contracts over printed terms thereof with respect to time or terms under which consideration was to be paid or payable, or to the effect that said agents' authority to substitute magazines was limited to certain periodlcnls only, but it was consistent with such printed terms and provisions that such alterations or changes should take precedence over the other, and said contracts, as thus altered, were not in fact subject to legal enforcement, except in accordance with said nlterations and changes;

1 Complaint published as amended as of July 9, 1937. THE TIMES SALES CO., INC., ET AL. 465 464 Complaint With result that acts and practices of said selling agents in representing that they had authority to alter printed terms as above set forth, and in making such alternations, had tendency and capacity to mislead and deceive purchasers and prospective purchasers of e-ncyclopedias, wlth and without revision and research services, and of magazine subscriptions, into false and erroneous belief that said representations were true, and into purchase of said encyclopedias, etc., and into signing of contracts the-refor in rellance upon such erroneous belief and upon terms of said contracts as thus written in by said agents, and with further result that said various acts, threats, force, duress, undue influence, and false pretenses in verforming, enforcing, anll endeavoring to enforce such altered contracts, signed as above set forth, deceived purchasers and signers into false and erroneous belief that they were bound thereto according to printed terms thereof, and thus Into performance of said contracts in accordance with such terms, and of inducing purchasers and signers into such performance, in accordance with such printed terms, and into completed purchase of said encyclopedia, services and magazines offered and sold by them, and with tendency and capacity to divert trade to them from their competitors who do not make false and misleading statements and representations in connection with the sale of their products, and do not promote and achieve such sales by means of false and misleading representations or by threats, force, duress, undue influence, or false pretenses:

lTeld, That such acts and practices were to the prejudice of the public and competitors and constituted unfair methods of competitlop. J/r. Jay L. Jackson for the Commission .

.l!r. Edward Davis, of Philadelphia, Pa., for respondent. Complaint Pursuant to the provisions of an Act of Congress approved Septe~nber 20, 1914, entitled "An Act to create a Federal Trade Comllltssion, to define its powers and duties, and for other purposes," the Federal Trade Commission, having reason to believe that The Times Sales Company, Inc., a corporation; The Times Sales Company; Ed ward n. Seegar, doing business and trading as The Times Sales Colllpany; William Heim and George G. Heim, hereinafter referred to as respondents, have been and now are using unfair methods of ~mnpetition in commerce as "commerce" is defined in said act, and It appearing to the Commission that a p1:oceeding 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, The Times Sales Company, Inc., is a corporation organized and existing under and by virtue of the laws of the State of Pennsylvania, with its principal place of business located at 152-1 Chestnut Street, in the city of Philadelphia, in the State of Pennsylvania. All or approximately all of the controlling Complaint 25F.T.C.

and voting capital shares of stock of said corporate respondent are owned, held or controlled by one or more of the other respondents named herein. Since the 8th day of May 1934, the assets, business, and affairs of said corporate respondent have been, anu now arc, helu by and under the control, direction, and management of one or more of the other named respondents herein. llespomlent, The Times Sales Company, is a proprietorship organized and existing under and by virtue of the laws of the State of Pennsylvania, registered under the "Fictitious Name Act" of said State, under the name of the respondent, Edward B. Seegar, with its principal place of business located at 1524 Chestnut Street, in the city of Philadelphia of said State.

Respomlent, Edward n. Seegar, is an individual trading under the name and style of The Times Sales Company, with his principal office and place of business locatell at 1524 Chestnut Street, in the city of Philadelphia, in the State of Pennsylvania. On or about the 8th clay of May 1934, the said Ed ward D. Seegar became the successor in interest to the assets, business, and affairs theretofore owned and operated by The Times Sales Company, Inc., corporate respondent named herein. ' Respondents, William Ileim and George G. IIeim, are individuals and officers of The Timl:'s Sales Company, Inc., corporate respondent named herein, anu members and officers of The Times S1tles Cornpuny, copartnership respondent named herein, with their principal place of business located at 1524 Chestnut Street, in the city of Philadelphia, State of Pennsyl\'ania, and at all times material to this complaint said respondents have been and are now engaged in and with the business of said corporate and copartnerships rl:'spondents named herein, and with the advertising, promotion, and man- Hgement thereof.

The aforesaid respondents have been, and each of them has been, for more than two years last past, and now are, engaged in the business of selling, offering for sale, and distributing in commerce among and between the various States of the United States, and in the District of Columbia, an encyclopedia consisting of eight volumes, called and described as "The Times Encyclopedia" and sometimes as "The Times Encyclopedia and Gazetteer," in combination with a 10 years supplemental loose leaf extension or revision service issi.1ed periodically for said encyclopedia, and a membership in a bureau of research, together with magazine subscriptions and periodicals. Respondents have described and do describe such transllctions as being a "combination sale" and as an "encyclopedia deal.'' In the course and conduct of the said business, respondents have THE TIMES SALES CO., INC., ET AL. 467 Complaint caused, and each of them has caused, and now cause, said Looks, Hlcyclopedia, services, magazines, and periodicals, composing said deal, when sold or ordered, to be shipped and transported from the State of origin thereof to various States of the United States other i~an the State of origin of said shipments, and to and in the District of Columbia PAn. 2. In the cou~se and conduct of the business of respondents, as aforesaid, respondents, at all times material to this complaint, have been and are now in competition with other corporations, firms, partnerships, and individuals engaged in the same and similar bus- Iness and in like commerce.

PAR. 3. It has been and now is the practice of respondents and o_f each of them to offer for sale, sell, and distribute the said combination sale and encyclopedia deal, including encyclopedia of eight ~olu~es, 10 years revision service, 10 years research bureau memers~up, and magazine subscriptions, by use of the mails, interstate ~arners, and other channels of commerce in and among the various states of the United States and in the District of Columbia; Ly ~cans of sales agents, canvassers, and employees; by means of conll'acts, credit instruments, collection agents, employees, and attor- ~eys, and Ly means of circulars, letters, pamphlets, literature, and Y oral, printed, written, and pictorial displays, statements, and ~epresentations in the course and conduct of which respondents ·lave made and now make false and misleading statements, repre- ~eJ.ltations, and promises, and otherwise have used and now use unair methods in the solicitation of and sale to purchasers and pros- Pective purchasers of respondents' said combination sale and encyclopedia deal, all to the injury of the public and to the injury of competitors of respondents.

f PAR. 4. In the course and conduct of the business of respondents, as a oresaid, respondents and their agents and employees have used and Use Printed forms of contracts, to which the signatures of purchasers and subscribers have been and now are solicited and secured by agents, canvassers, and employees of responclents t 1tereunto d u l y aut1·wnzec· l .0 lle fol'm of such contract used by respondents during the year 1935 ~nd. theretofore, or as late as the month of December, 1934, purported 'r~ Its face to Le a "Special Ad vcrtising Contract" offered by The a Irnes Sales Company, Inc., of Philadelphia, Pa., respondent herein, c n~ among other thinrrs stated and represented that respondents' enbye 0Pedia referred t;' therein was and is "Kept Constantly Up-To- ate"• A later form of contract, used by responclents d urmg· and8· l~ce tte year 193-1, purports on its face to be the contract offered by le Tnnes Sales Company, Inc., of Philadelphia, Pa., and carries on 468 :FEDERAL TRADE COl\Il\IISSION DECISIONS Complaint 2:iF.T.C. its face a pictorial display of the eight volumes constituting the ency· clope~ia and of the binder for the loose leaf revision service. Common to the printed terms of the contracts just described, and to the form of contract used by respondents during the years 1935 and 1936 to date, are the following terms and provisions, to wit: Gentlemen: You may enter my order for the publications and services as listed hereunder to be st>nt parcel post or express charges collect. COMBINATION S;\LEJ Vola. P1·ice THE Tll\IES ENCYCLOPEDIA-ARTCRAFT BINDING ______ g Vols ----- 10 YEARS REVISION SERVICE----------------------------Total Cost $15.00 10 YEARS BUREAU OF RESEARCH MEMBERSHIP 1 Yr. HARPERS 2 Yrs. ASIA 3 YrsLIFE Which I promise to pay to your order as follows: $5.00 with order, balance ns follows: $G.50 upon delivery of Encyclopedia, Plus Parcel Post or Express Charges and $3.50 in 30 days. On receipt of flnnl payment I am to rective 1\Ia,::nzine Subscriptions and Coupon Bond for J..()ose !Raf Service and Membership Certificate, for nnreau of Research. I am t·etaining a copy of tlri.~ at}'reement, and ha1'C no verba~ o1· written understanding with 110ur representative other than t11e terms herein stated. This contract I~ not subject to change or cnncellation. The Times Sales Co. guarantees their Publications to be equal In evf'ry respect to samples shown; bf'nce no solicitor Is authorizt>d to take orllcrs subject to approval. No subscriptions accepted from newsdealers or libraries. In the course and conduct of the business of respondents, as afore· said, it has been and is the practice of respondents' sales agents and employees to solicit, induce and secure the names and signatures of purchasers and subscribers to the aforesaid contracts and to clo!ie sales for respondents' said combination sale and encyclopedia deli!, including books, services, research bureau membership, and maga· zine subscriptions, by stating, representing, and implying that the printed terms of said contracts were and are open to alterations anti changes, in the matters of time and terms of payment, and with reference to the magazines named in the printed terms thereof, that other ¥\magazines not so named and printed but desired by purchaser~'~ and subscribers might be substituted for those named in the printed contract form, whereupon said agents did and do make in writi~g upon the face of said contracts certain alterations and changes 111 the printed terms thereof by altering and changing either the tbn~ of payment or the terms of payment, or both time and terms 0 payment, and by substituting for one or more of the magazines named in print on the contract form the names of and subscriptions to magazines not so named in print, all in accordance with the pa:i ticular agreements and understanding as made and had with Slllc THE TI1\1ES SALES CO., INC., ET AL. 469 Complaint purchasers and subscribers signing their names and signatures to said contracts.

b PAn. 5. Upon receipt of said contracts above described, signed Y. persons solicited by respondents' sales agents, in which the Printed terms have been and are altered and changed in writing on the face thereof, as aforesaid, it has been and is the practice of respondents, and of each of them, verbally to disavow and deny the authority of said agents in making any of the alterations and changes in the printed terms of respondents' contract form, as de- s .b en eel in paragraph 4 above, but nevertheless to enforce, or seek to enforce, and otherwise to treat the said contracts as binding and enforceable against signers thereto according to the printed terms thereof and as being unaffected and uninduced by the alterations ;nd changes made in writing on the face thereof, or by false, miseading, and unauthorized statements, representations, and promises lna?e by respondents' sales agents, in the course and conduct of Wl.nch, while refusing to honor said contracts according to the alter- ;hons and changes in the printed terms made in writing on the aee th<'reof, both as to time and terms of payment and with refer- ~nce to the substitution of magazine subscriptions, respondents have l;}d ~nd hold to, and have enforced and enforce, the printed terms 0 said contracts against signers thereto, and through and by means ~f letters, collection agents, and attorneys, did and do threaten suit d.or the legal enforcement of said contracts, and otherwise by force, t Uress, undue influence, and under the false pretense that said con· r~cls are legally enforceable against signers thereto according to the ~rinted terms thereof as against the aforesaid alterations and ~hHtngcs ~ade in writing on the face there?£, l~ave held and hold to e benefits of said contracts the same as 1f said contracts had been land Were induced secured, and closed in reliance upon the printed<l er:rn ' f s and. offer therein; thereby converting the acts and conduct ~h respondents' sales ~gents to respondents' be.nefi.t and achieving e sale and distribution of respondents' combmatwn sale and en- ~.Y~lopedia, inclusive of the books, services, membership, and mag- ' Z~es named. in the print appearing on the face of said contracts. a AR. 6. In the course and conduct of the business of respondents, f \aforesaid, respondents and their agents and employees did and do ca se~y and misleadingly state, represent, and promise that the said sOJn?Ination sale and encyclopedia deal includes a 10 years revision qervice in the form of loose leaf supplements issued and distributed \> U~rterly each year, by means of which the encyclopedia of eight 0 u:rnes is kept "up-to-date" and "abreast of the times"; whereas in 470 FEDERAL TRADE COnil\IISSTON DECISIONS Findings 25F.T.0.

truth and in fact it has not been and is not the practice of respondents to perform said promise or to cause said revision service to be rendered to purchasers of said combination sale and encyclopedia deal, and whereas in truth and in fact the said revision service did not and does not keep the said encyclopedia up-to-date or abreast of the times. PAR. 7. Respondents' said false and misleading statements, representations, acts, and course of conduct, as set forth in paragraph 6 above, and respondents' threats, force, duress, undue influence, and false pretenses in the enforcement of contracts, as set forth in paragraphs 4 and 5 above, have had and have, and each of them has had and has, the tendency and capacity to mislead and to deceive purchasers and prospective purchasers of encyclopedias, with and without revision services, reference books, and magazine and periodical subscriptions, into the false and erroneous belief that respondents' statements and representations in connection with the sale of respondents' encyclopedias, revision and research services, and magazine subscriptions were and are true, and into the purchase o:f said encyclopedias, services, and subscriptions in reliance upon such erroneous belief. The aforesaid acts and practices have had and have, and each of them has had and has, the tendency and capacity to divert trade to respondents from their competitors who do not falsely and mislead· ingly represent their products and who do not promote and achieve the sale of their said products by means of false and misleading statements and representations or by means of threats, force, duress, undue influence, or false pretenses.

PAR. 8. The above and foregoing course of conduct, acts, and prac· tices of respondents have been and are all to the prejudice of the pub· lic and respondents' competitors, and have been and are unfair methods of competition within the meaning and intent of Section 5 of an Act of Congress entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914.

REronT, FINDINGS As TO THE Facts, AND OtmErr Pursuant to the provisions of an Act of Congress approved Sep· tember 26, 1914 ( 38 Stat. 719), the Federal Trade Commission on the 14th day of May, 1936, issued, and on the 15th day of l\fay 1936, served, its complaint in this proceeding upon respondents The Times Sales Company, Inc., a corporation; The Times Sales Company; Edward D. Seegar, doing business as The Times Sales Company, and William Heim and George G. Heim, charging them with the use ~f unfair methods of competition in commerce in violation of the provl· THE TIMES SALES CO., INC., ET AL. 471 4G1 Fintlings sions of said act. On the 11th day of November 1936, respondents filed their substituted and amended answer in this proceeding. There- ~after, a stipulation as to the facts, dated May 20, 1937, was entered Into, whereby it was stipulated and agreed that the statement of facts contained therein, executed by and on behalf of respondents through their counsel, Edward Davis, Esq., and by W. T. Kelley, Chief Counsel for the Federal Trade Commission, subject to the approval ?f the Commission, might be taken as the facts in this proceeding and ln lieu of testimony in support of the charges stated in the complaint, or in opposition thereto, and that the Commission might proceed upon such statement of facts to make its report, stating its findings as to the ~acts (including inferences which it might draw from said facts) and lis conclusion based thereon, and enter its order disposing of the proceeding without the presentation of argument or the filing of briefs. Thereafter, the said complaint, in accordance with the said stipulation as to the facts, was amended to accord with the facts as shown by r~spoudents' said substituted and amended answer and said stipulation as to the facts. Thereafter, this proceeding regularly came on for hearing before the Commission on said complaint, as amended, and on said substituted and amended answer and stipulation, the said stipulation having been approved and accepted, 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 lllakes this its findings as to the facts and its conclusion drawn therefrom.

FINDINGS AS TO THE FACTS P.AnAGRAPH 1. Respondent The Times Sales Company, Inc., is a corporation, organized and existing under and by virtue of the laws of the State of Pennsylvania, and since the date of its incorporation, October 3, 1929, was actively and continuously engaged in business Until the 17th day of April 1934, with its principal place of business located at 1524 Chestnut Street, in the city of Philadelphia, State of Pennsylvania. On the said 17th day of April 1934, said corporate respondent was marked "out of existence," on the records of the D~partment o£ Revenue of the State of Pennsylvania, in accordance ~Ith the laws of the State of Pennsylvania, and since said date has een and remained inactive with respect to engaging in the business ~f selling and distributing its products in commerce among and etween the several States of the United States. Said respondent has never been legally dissolved and is subject to revival for active busi- ~~ss upon the payment of certain corporation taxes in accordance lth the laws of the State of Pennsylvania. The last duly elected 472 FEDERAL TRADE COl\Il\IISSION DECISIONS Findings 25F.T.C.

and acting executive officers of said corporate respondent are respondents 1Villiam Heim and George G. Heim, who were also the duly elected and acting executive officers of said corporation, engaged in the control, direction, and management of the business and affairs thereof, from the date of its said incorporation to and including the 17th day of April1934. During the period between April 17, 1934, and May 10, 1934, the assets, business, and affairs of said corporate respondent were under the control, direction, and management of respondent William Heim. On or about the 9th day of May 1934, the business and affairs of said corporate respondent were acquired by respondent Edward B. Seegar, trading under the name of The Times Sales Company, respondent named herein, and the said business and affairs of said corporation are now held and controlled by the said respondent Edward B. Seegar. Respondent The Times Sales Company is a proprietorship organized and existing under and by virtue of the laws of the State of Pennysylvania and as such is owned and controlled by respondent Edward n. Seegar, and registered under the name of respondent Edward D. Seegar, on the loth day of May 1934, under the "Fictitious Name Act" of the State of Pennsylvania. Its principal place of business is located at 1524 Chestnut Street, in the city of Philadelphla, State of Pennsylvania.

Respondent Edward B. Seegar is an individual doing business and trading under the name and style of "The Times Sales Company", respondent named herein, and has his principal office and place of business located at 1524 Chestnut Street, in the city of Philadelphia, State of Pennsylvania.

Respondent 'William Heim is an individual and the last duly elected, acting, and managing executive oflicer of the corporate respondent. The Times Sales Company, Inc., and since the organization of respondent The Times Sales Company has been, and now is the manager of said company, and as such has been, and now is, engaged in and with the business and affairs of said respondent com· panies and in the business promotion and management thereof. PAR. 2. Rrspondents, The Times Sales Company, Edward D. Seegar, trading as The Times Sales Company, and William Heim, for more than two years next preceding the issuance of the Com· mission's complaint in the instant proceeding have been, and now· ure, engaged in and with the business of selling, offering for sale, and distributing in commerce among and between the various States of the United States, and in the District of Columbia, an encyclopedia consisting of eight books or volumes, called and described as "The Times Encyclopedia," and sometimes a.s "The Times En- THE TIMES SALES CO., INC., ET AL. 473 464 Findings cyclopedia and. Gazetteer," together and in combination with a ten )'ears supplement or revision service issued periodically for said encyclopedia, a membership in a so-called "Bureau of Uesearch," and subscriptions to various magazines and periodicals of interstate circulation. During the years 1932, 1933, and 1934, but not after April 17, 193±, corporate respondent The Times Sales Company, Inc., was engaged in the same and like line of commerce as aforesaid, although certain contract forms bearing the name of said The Times Sales Company, Inc., were used subsequent to April 17, 1934. Subsequent to said date, and more particularly from l\fay 8, 1934, the business 0~ ~selling and distributing the said encyclopedia, supplement or re- VIsion service, membership in the Bureau of Research, and magazines and periodicals, was conducted by respondents The Times Sales Company, Edward B. Seegar, trading as The Times Sales Company, and William Heim. • Respondents have described and do describe the aforesaid sales transactions as being a "combination sale" and as an "encyclopedia deal."

In the course and cond.uct of the business aforesaid, respondents have caused and each of them has caused, and respondents The Times Sales Company, Edward D. Seegar, trading as The Times Sales. Company, and 'Villiam Heim, now cause the said books, encyclo- Pedia, supplement or revision service, and a certificate evidencing 111embership in the Bureau of Research, entitling the member to research services, and magazines and periodicals, composing the socalled "combination sale" and "encyclopedia deal," when sold or ordered, to be shipped and transported from the State of origin thereof, to various States of the United States other than the State uf origin of said shipments, and to and in the District of Columbia. P.~n. 3. During the course and conduct of the business of respondents, as aforesaid, respondents, including corporate respondent 'I'he Times Sales Company, Inc., when active, have been and are in e?nlpetition with other corporations, firms, partnerships, and indi- ''1?ttals engaged in the business of selling, offering for sale, and distrtLuting in commerce among and. between the various States of the ~united States and in the District of Columbia, so-called reference ouks and encyclopedias, both with and without supplemental or re,·ision service, and. subscriptions to magazines and periodicals. l PAn, 4. In the course and conduct of the business of respondents, a 1 as aforesaid, it has been and is their practice to offer for sale ~~d sell said combination sale or encyclopedia. deal, inclusive of "The t Hues Encyclopedia," supplement or revision and research services, together with subscriptions to magazines or periodicals, by means Findings 25F. T. C.

of direct solicitation of purchasers thereof, locate>d in various States of the United States and in the District of Columbia, by agents thereunto authorized by said respondents, which agents receive and take orders therefor in the form of written contracts and fonYarcl the same to respondents' principal place of business m the city of Philadelphia, State of Pennsylvania. Upon receipt of such orders, it has been and is the practice of respondents to fill the same by causing the said encyclopedia, supplement or revision service, research .services, and magazines, or subscriptions thereto, to be sent through the United States mails. Subscriptions to magazines :ne cleared through the agencies of their publishers. It has also hN'11 and is the practice of respondents to supply the said agents with !L list of names of those magazines for which said respondents were and are authorized by publishers to take orders, incltH1ing, among others, llarper8, Asia, llfode1;L Mechanics, Forbes, aml Redbook. Respondent The Times Sales Company and respondent Edward D. ticegar, trading under the name The Times Sales Company, now employ three agents or salesmen, but sai<lrespondents have variously employed between ten and fift£>£>n of such agents or salesmen during the times hereinabove mentioned. Said agents or salesmen are pnitl no salaries, work on a commission basis, and are free to solicit ordl'l'::i and to sell in territories of their own choice. PAn. 5. The contract forms supplied by respondents to the aforesaid agents and salesmen, and used by them and by the said agents and salesmen in soliciting and taking orders, bear on their fare certain printed terms and provisions, together with certain representations with respect to the said combination sale or encyclopeditt deal, together with spaces for the signatmes of, and for certain collateral information concerning, purchasers and subscribers. One form of such contract, which was used by respondents and the aforesaid agents and salesmen during the years 1934 and 1935, Lears on its face, among other things, a pictorial display and represent at ion of the eight volumes constituting the encyclopedia and of a binder for the supplement or revision service and purports to l>e the offer and contract of respondent The Times Sales Company, Incorpontte<l. Another form of such contract used by respondents nnd the aforesaid agents and salesmen during the years 1934 anJ 1935 purports to be the offer and contract of respondent The Times Sales Company and represents on its face to be a "Special Advertising Contract,'' and among other things further represents that "The Times Encyclo· pedia" and "Loose Leaf Extension Service," therein refened to, nre "Kept Constantly Up-to-Date." A further form of contract which was used by respondent The Times Sales Company, Inc., and its THE TIMES SALES CO., INC., ET AL. 475 46-! I<'illllings agents and salesmen during the year 1933 and until April17, 193-!, and by respondent The Times Sales Company, and hy its owner, respondent Edward n. Seegar, and its manager, respondent ·william Reim, and their agents an<l salesmen, subsequent to :1\Iay 10, 1V3-1, until the year 1935, purports on its face to be the offer and contract of The Times Sales Company, Inc., an<l further represents that the same is a, "Special Advertising Contract," and that "The Times Encyclopedia" and the "Loose Leaf Extension Service," therein referred to, are "Kept Constantly Up-to-Date." Common to the printed terms of the contract forms above refened to and described, and to the form of contract used by respondents The Times Sales Company, Edward B. Seegar trading as The Times Sales Company, and ·william Ileim, and their agents nnd salesmen, during the year 193G, are the follmving terms and ]Wovisions, to wit:

Gentlenwn: You mny enter my order for the publications and services ail listed l1ereunder to be sent parcel pqst or express charges collect. COMBINATION SALE Vol8. Price TII!<J Tll\IES ENCYCLOPEDIA-ARTCRAFT niNDING 8 Vols. -------- 10 Y:F;AUS REVISION SERVICE------------------------- Total Cost ::;15.00 10 YEARS BUHEAU OF RESEARCII 1\IEl\IllERSIIIP 1 Yr. HARPERS 2 Yrs. ASIA 3 Yrs. LIFE \Vhieh I promise to pny to your order as follows: $3.00 with order, balance as follows: $G.!:i0 upon delivery of Encyclopedia, Pins Parcel Post or J,;xprc>;s Charges and $3.GO in 30 days. On receipt of final payment I am to receive l\fagnzine ~ubscriptions and Coupon Bond for Loose Leaf Service and 1\lember- ~hip Certificate, for Dureau of Research. I am retaining a copy of this agl·eellent, antl have no verbal or written understand-ing with your t•epresentative Other than the terms herein stated. This contract is not subject to change or eaucellntiou. The Times Sales Co. guarantees their Publications to be equal In every respect to samples shown; heuce no solicitor is authorized to take ~-r<Iers subject to avproval. No subscriptions accepted from newsdealers or lhraries.

PAR. 6. Respondents did not and do not affirmatively authorize the nforesaid selling agents to represent the terms and provisions of the offer made by respondents other than as set forth in the printed t~ 1'llls of the contracts used by said agents, or to make oral or written c lnnges or alterations in the printed terms thereof, except with refer~ <'llce to the substitution of certain magazines, the names of which are ~~Applied by respondents and known to said selling agents. Neverleless, certain of said agents, in selling and soliciting purchasers and Prospective purchasers of respondents' combination sale or ency~ 476 FEDERAL TRADE COl\11\USSION DECISIONS Findings 25F.T.C.

clopedia deal, and in soliciting, inducing, and securing signatures of purchasers to said contracts, did and do in fact represent that they have authority to alter and change the printed terms thereof with respect to the time, terms, and conditions therein providing for the payment of the consideration of $15.00, and with respect to magazines named in the printed terms thereof, to substitute therefor other magazines of the purchaser's choice not so named in print. Thereupon the said agents did and do make in writing upon the face of said contracts certain alterations and changes in the printed terms thcr('of, altering and changing the time of payment, or terms of payment, or both the time and terms of payment, and by substituting for one or more of the magazines, named in print therein, the names of, and subscriptions to, magazines not so named in print, but all in accordance with the particular agreements and understandings had and made with the purchasers or subscribers signing their names to said contracts.

In the foregoing connection, for example, the printed terms of the contract forms, hereinabove described, provide for $5.00 payment with the order, $G.50 upon delivery of encyclopedia, plus parcel post or express charges, and $3.50 in thirty days. Nevertheless, certain of said agents did and do agree with purchasers to accept a down payment of less than $5.00, and upon receipt of such amount, acknowledge the same in writing upon the face of the contracts signed by the purchasers and thereon further indicate in writing the balance of moneys due under such contracts. A further form of alteration, demonstrative of the conduct of said agents, is that by which said agents, in accordance with agreements had and made with purchasers and signers thereto, acknowledge in writing upon the :face of said contracts the receipt of the down payment of $5.00, and further to provide in writing that the balance of $10.00 is payable in two subsequent payments and that the purchaser is to be billed for such balancl! or balances in lieu of C. 0. D. \With respect to the substitution of the names of magazines other than those named in the printed forms of said contracts, certain of said selling agents did and do write in the names of magazines :for which they or respondents have no authority to sell or take subscriptions, such as Atlantic Monthly as a substitute for Life, or for Asia, Christian Oentu1"1J for Asia, and Readers Digest for Life. By the above means and methods purchasers and signers to said contracts are induced to purchase and sign their names to said contracts. PAR. 7. Upon receipt of the contracts, altered and changed by the said agents in writing upon the face thereof, as aforesaid, it has been and is the practice of respondents to proceed to the performance of THE TIMES SALES CO., INC., ET AL. 477 46'1: Fimlings such contracts in accordance with the printed terms thereof, the same as if no such alterations were made or so appeared and as being ~naffected and uninduced by the representations and terms written In by the said agents on the :face of the contract, by sending the encyc!opedia C. 0. D. for balances due, when the purchaser and person ~Igning said contract, according to the written alterations thereon, Is to be billed for the balance or balances in lieu of C. 0. D., and by clearing subscriptions to the magazines named in print on said contracts, and otherwise insisting upon said purchasers accepting the lnagazines so named, instead of the magazines actually subscribed for by said purchasers and the names of which have been and are Written in on the face of said contracts in substitution of one or lllore of the magazines named in print therein, more particularly w·hen the magazines substituted are ones for which respondents have no authority to sell or take subscriptions, or otherwise cannot be supplied by respondents.

In dealing with purchasers and signers to contracts altered in '"writing as above described, it has been and is the further practice of respondents, through and by means of letters, collection agents, and attorneys, to disavow and deny the authority of the selling agents to Inake the alterations above described, to represent antl insist that the printed terms of the contracts put such purchasers and signers on notice of the selling agent's limitation of authority in this respect, and to represent and insist that the said contracts are legally enforceable against signers thereto according to the printed terms thereof, t~e same as if unaltered in writing and regardless the written alterations in the printed terms appearing on the face thereof. In conltection therewith respondents sue and threateti purchasers and signets to said contracts with suit for the legal enforcement of the same and for collection of the unpaid portion of the consideration $15.00 ~nd hold t? the down payments made by purchasers in such contracts. t Y these means of fore~, duress, and undue influence, and un_der ~e false pretense that said contracts are legally enforceable agamst Signers thereto, without reference to the written alterations in the Printed terms thereof, respondents have converted and convert the ll~ts and conduct of the said selling agents to the benefit and profit ~h the business conducted by respondents, and did and do achieve d e sale and distribution of the said combination sale or encyclopedia eai, inclusive of the books, services, and magazines. h :P ~n. 8. The printed terms and notices set forth in the contracts s erei~labove described are not sufficient to put purchasers and proaPcctlVe purchasers and signers thereto on notice that the said selling gents are without authority to make alterations or changes in writ- COl\IIIIISSIO~ DECISIONS 478 FEDERAL TRADE Findings 2jF. T. C.

ing on 1he face of the contracts over the printed terms thereof with respect to the time or terms under which payment of the consideration is paid or payalJle, or that the authority of said agents with respect to the substitution of magazines is limited to certain magazines only. It is consistent with the printed terms and provisions of the contracts hereinabove described that alterations or changes made on the face thereof in writing, with respect to the time or terms of payment awl substitution of magazines, shall take precedence over the printed terms thereof relating to time and terms of payment antl snhstitution of magazines, and said contracts, as so altered, are not in fact subject to legal enforcement except in acconlanre with th~ said alterntions and changes.

PAR. 9. The combination sale of encyclopedia deal hereinabove described (loes in fact include a 10-year revision service, in the for!11 of suppl<'m£>nts or booklets which are issued and distrilmted quart<'rly each year, by which certain items or port ions of the encyclopedia arc amended and supplemented from time to time. Iu connection with this service, pnrchascrs arc supplied with so-called "tear slips," which provide spaces for the name and address of purchaser and ·p£>rson entitled to such s(lrvice. As a condition precedent to mailing and receipt of each issue of the supplement or revision Sf'rvice, purchasrrs are re{lUircu to fill in the blanks au.d SCll(l the same to the office of respondents. The purpose of this practice ib to provide respondents with the correct names and ad- <lrPsses of tho persons entitled to such suppl<'ments· prior to mailing thereof, this for the l'Ntson that the purchase price of the combination sale or encyclopBdi::t tlenl does not allow or include the cost of periodical circularization of customers to ascertain conect address, and for the reason th:tt constant changes of address among purchasers otherwise results in the loss of supplements in the course of delivery. ~ PAR. 10. The aforesaid acts and practices of respondents' sellin!-{ agents in representing that they have authority to alter the printed terms of contracts with respect to time and terms of payment a~d substitution of magazines, and pursuant to such representations, JJI making such alterations in writing upon the face of said contracts, all as set forth in paragraph G above, have had and have, and each of them has had and has, the ter1dency and capacity to mislead aud deceive purchasers and prospective purchasers of encyclopetlias, with nnd without revision and research services, aml of mn.gazine subscriptions, into the false and erroneous belief that said representations are true, and into the purchase of encyclopedias, services, and magazine THE Tll\IES SALE::i CO., INC., ET AL. 479 464 Order subscriptions of respondents, and into the signing of contracts therefor in reliance upon such erroneous belief and in reliance upon the terms of said contracts as written in and on the face thereof by said agents. The aforesaid acts, representations, threats, force, duress, undue influence, and false pretenses, of respondents in performing, enforcing, and endeavoring to enforce contracts signed by persons relying upon written alterations appearing on the face thereof over the printed terms thereof, all as set forth in Paragraphs 7 and 8 above, have the tendency and capacity to, and ?id and do in fact, deceive purchasers and signers to said contracts Into the false and erroneous belief that they were bound thereunto according to the printed terms thereof, and thus, into the performance of said contracts in accordance with said printed terms; and the said practices otherwise have the tendency and capacity to, and did and do, induce purchasers and signers to such contracts into ~he performance thereof in accordance with said printed terms and Into the completed purchase of' the encyclopedias, services, and magazines offered for sale and sold by respondents. 1~AR. 11. The aforesaid acts and practices of respondents and o.f the said selling agents have had and have, and each of them has had and has, the tendency and capacity to divert trade to the busines:3 of respondents from their competitors who do not make false and misleading statements and representations in connection with the sale of their products and who do not promote and achieve the sale thereof by means of false and misleading representations or by llleans of threats, force, duress, undue influence, or false pretenses. CONCLUSION The aforesaid acts and practices of respondents, and of their agents, under the conditions and circumstances set forth in the foregoing findings, are to the prejudice of the public and of respondents, competitors, and constitute unfair methods of competition in comlllerce, within the intent and meaning of Section 5 of an Act of Congress, approved September 2G, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

ORDER TO CEASE AND DESIST . This proceeding having been heard by the Federal Trade Commis- 81?n upon the complaint of the Commission, as amended, and the substitute and amended answer filed herein by respondents on Novem· her 11, 1936, and upon the agreed stipulation as to the facts, dated 15Bl2tm--su----ss Order 25}'. T. C. May 20, 1936, enter.>re<l into between respondents herein, The Times Sales Company, Inc., a corporation; The Times Sales Company; Edward B. Seegar, trading as The Times Sales Company, and William Heim, and W. T. Kelley, Chief Counsel for the Commission, which stipulation provides, among other things, that without further evidence or other intervening procedure, the Commission may issue and serve upon said respondents findings as to the facts (including infer· ences which it may draw from said stipulated facts) and its conclusion based thereon, and the Commission having made its findings as to the facts and its conclusion that said respondents have violated the pro· visions 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 hereby ordered, That the respondents, The Times Sales C01n· pany, Inc., a corporation; The Times Sales Company; Edward 13. ~eegar, individually, and trading as The Times Sales Company; and 'William Heim; their respective officers, agents, representatives, and employees, in connection with the sale of encyclopedias, revision and research services, magazines or other similar commodities in interstate commerce or in the District of Columbia, cease and desist from: Representing in any manner that contracts for the purchase of the products or commodities sold by them, the terms and provisions of which have been altered, changed, or modified by their respective agents, employees, or representatives pursuant to agreement or under· standing with the purchasers of such commodities, are subject to per· formance and are legally enforcible against said purchasers in accordance with the printed terms and provisions of said contracts irrespective of the alterations, changes, or modifications so made. It is further ordered, That the respondents shall, within 60 days after service upon them of this order, file with the Commission a re· port in writing setting forth in detail the manner and form in which they have complied with this order.

nrPERIAL CANDY CO. 481 Syllabus