Bernstein, Harry

Text (OCR of the scan at left; may contain errors)

IN THE 1\IA TTER OF ISRAEL ZAVELOFF AND HARRY BERNSTEIN, TRADING AS EVERLAST SUIT CASE & BAG COMPANY CO!IIPLAlNT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SI!:C. II OF AN ACT OF CONGRESS APPROVED SEP'£, 26, lOH Docket 2887. Compl{lint, Aug. 4, 1936-Decision, Aug. 11, 1931 Where two 11partners engaged In manufacture of bather luggage, and In uso In such manufacture of all four general types of leather employed in runldng leather luggage, namely, solid, top grain, and spilt leathers and buflln, and In sale and distribution of such leather luggage In commerce among the various Stater and In the District of Columbia, ln substantial comrJetitlon with those engaged in manufacture, sale, and distribution of leather goods In commerce, as above set forth, and incluuing many competitors who sell leather luggage made from top grain, and al~o that made from spilt leather and properly describe former, as variously known by manufacturers, dealers, and purchasing public, as "cowhide," "genu· lne cowhide," "lt>other," "genuine ll'other," "warranted leather," and "top grain," and properly describe latter, as similarly generally known, as "spilt lt>atber" }uggagP- Labcled and branded their goods of l"split leather "WARRANTED GE~UINE LEATHER'' or ''\VARHANTED LI•:ATIIER," notwithstanding fact Ing· gage in onestlon, thus brnnl!ed, was not made from outside or top side bide, or from top grain, as understood In trade nn<l by rmrcllasing public, but was made from l"split lt:'utlwr, 1. e., lower JlOl'tion of the lllue from which top grain portion has bel'll cut away; With capacity and tln<lt•ucy to mi:.;lt•ad and d('C('ive pmcha~iug pulJJIC and !!Ub);tuntinl pot·tion of trade Into erroneous belief that their said luggage, thus brnuded oncl Jabels>d, was made from top grain leather, fot· goods of which purchasing pnhllc has generally prononncpll and distinct }Jref· erence, and with rNmlt of plnelng In hunch! of wholesalers and retailers means whereby said luggage, made of split leather as ahove S('t forth, good;,~ ot which cnn be made to rPsl'mLie those of the other In oppParance, Is passed oct to purchaslug public as top grain l<'other luggage, and consuming pulJllc purc·based substantial \'volume of their aforesaid product. and trade was unfairly diverted to tllPm from thpir competitor~, likewise engaged In manufacture, sale and distribution of leather luggage, and who truthfully brand and represrnt kind of leather m;ed in manufacture ot their products; to the substantial injury of competition in commerce: lleld, That such nets and practlcrs were to the prejudl<'e of the public and competitors and constituted unfair methods of competition. Before Mr. John L. Noi"nor, trial examiner. !lfr. DelVitt T. Puckett for the Commission. Mr. Joseph D. Tarlowe, of New York City, for respondents. EVERLAST SUIT CASE & BAG CO. 743 742 Complaint Co11rPLAINT Pursuant to the provisions 0f 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" tha Federal Trade Commission, having reason to believe that Isra~l Zaveloff and Harry Bernstein, copartners, trading and doing business under the firm name and style of Everlast Suit Case & Bag Company hereinafter referred to as the respondents, have been and are usind unfair n1ethods of competition in commerce, as "commerce" is defined in said act, and it appearing to the said 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. Said respondents, Israel Za vel off and Harry Bernstein, are copartners, trading and doing business under the firm name and style of Everlast Suit Case & Bag Company, and have their. office and principal place of business at 130 Bleecker Street ' In the city of New York and State of New York. Respondents are now, and for more than one year last past, have been engaged in the manufacture of leather luggage and in the sale and distribution of the same, in commerce, between and among the various States of the United States and the District of Columbia; causing said products, when sold to be shipped from their place of business in the State of New Y o~k to purchasers thereof located in a State or States of the United States other than the State of New York. PAn. 2. In the course and conduct of their business aforesaid, respondents aro now and for more than one year last past have been in substantial competition with other corporations, individuals, Partnerships, and firms engaged in the business of manufacturing and sellin"b leather luml'a(l'e,.,~"> 0 in commerce between and amonrr~ the Various States of the United States and the District of Columbia. PAn. 3. In the course and conduct of their business as aforesaid, respondents manufactured certain of their luggage from split cowhide leather also described as the under or flesh side of the hide. Respondents' place upon such luggage, and have done so during the Period aforesaid, a conspicuous stamp or label reading "'Varranted Genuine Leather." Said stamp or label represents and implies to ~he purchasing public that the material with which such luggage Is covered is top grain leather, or as other~ise described, the outside or surface layer of the hide. Further, ret:ulcers are enabled by reason ?f said stamp or label, to mislead, deceiv.e, an~ defr~ud the purchas- ~ng public as to the quality of the material With which such luggage Is covered. Top grain leather js superior in quality, durability, and Findings 25F.T.O.

price to the split leather. The public generally believes the word leather to mean the top or hairy side of the hide. There are among the competitors of respondents, as mentioned in paragraph 1 hereof, manufacturers of leather luggage who do not in any way misrepresent or falsely label their said merchandise. PAR. 4. The above and foregoing representations, as shown by the label used by respondents, as described in paragraph 3, have the capacity and tendency to, and do mislead and deceive the purchasing public into the belief that the said luggage so labeled is manufactured from or covered with, genuine top grain cowhide, and have the capa~ity and tendency to, and do induce the said purchasing public, acting in such erroneous belief, to purchase respondents' product, thereby diverting trade to the respondents from those of their competitors who do not misrepresent and falsely label their product, and in this manner respondents do substantial injury to competition in interstate commerce.

PAn. 5. The above acts and things done or caused to be done by the respondents were and are each and all to the prejudice of the public and of raspondents' competitors, and constitute unfair methods of competition in interstate commerce within the meaning and intent of Section 5 of "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved Septemuer 26, 1914.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of an Act of Congress apprond 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, on August 4, 1936, issued and served its complaint in this proceeding upon respondents Israel Za vel off and Harry Bernstein, copartners, doing business under the firm name of Everlast Suit Case & Bag Company, charging them with the use of unfair methods of competition in commerce in violation of the provisions of sttid Act. After the issuance of said complaint, and the filing of respondents' answer thereto, testimony and other evidence in support of the allegations of said complaint were introduced by Dewitt T. Puckett, attorney for the Commission, before John L. Hornor, an examiner of the Commission, theretofore duly designated by it, and in opposition to the allegations of the complaint by Joseph D. Tarlowe, attorney 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 EVERLAST SUIT CASE & BAG CO. 745 742 Findings for final hearing before the Commission on the said complaint, the answer thereto, testimony and other evidence, briefs in support of the complaint and in opposition thereto (no oral argument having been made); 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 THE FACTS PARAOitAPH 1. The respondents, Israel Zaveloff and Harry Bernstein, are copartners, trading as Everlast Suit Case & Bag Company at 130 1Vest Bleeker Street, New York, N. Y. ·For several years last past they have been &ngaged in the manufacture, sale and distribution of leather luggage in commerce between and among the various States of the United States and in the District of Columbia. Respondents' customers are located at points in the various States of the United States and in the District of Columbia, and respondents cause their said merchandise, when sold, to be transported from their place of business in New York, N. Y. to purchasers thereof in other States of the United States and in the District of Columbia, at their respective places of business. At all times since respondents have been in said. business, they have been in substantial competition with other individuals and partnerships, and with corporations likewise engaged in the manufacture, sale, and distribution, or in the sale and distribution of leather goods, in commerce, among and between the various States of the United States and in the District of Columbia. PAR. 2. Four general types of leather employed in the manufacture of leather luggage are: solid leather, top grain leather, split leather, and buffin. Solid. leather is the entire hide after it has been properly processed and made rettdy for use. Top grain leather is the top portion of the hide from which the hair has been removed and the under portion or that lying next to the flesh of the animal has been cut away. Buffin is a very thin lightweight leather which is removed from the very top or outside portion of the hide. Split leather is the lower portion of the hide which lies next to the flesh of the animal and from which the top grain portion has been cut away. 'I'he respondents use all four types of said leather in the manufacture of their luggage.

Respondents' split leather goods offered for sale and sold in interstate commerce are labeled and branded "WARRANTED GENU- Findings 25F. T. C.

INE LEATHER" or "WARRANTED LEATHER." Respondents label and brand their top grain leather goods "TOP GRAIN." The purchasing public generally and the trade understands the words "warranted leather," "genuine leather," or the word "leather," when used to describe luggage, to mean luggage manufactured from top gruin leather.

P Alt 3. Many of respondents' competitors sell leather luggage manufactured from top grain leather and also from split leather. Said top grain leather is properly d.escribed by said. competitors, and is variously known by manufacturers, <lE•alers, and the purchasing public as "cowhide," "genuine cowhiJ.r," "leather," "genuine leather,'' "warranted leather," and "top grain." Said. split leather luggage is properly descrihcd by said competitors, and is gerwrally known by manufacturers, dealers, and. the pftrchasing public, as "split leather" luggage.

The purchasing public gen<'rally has a pronmmcNl nnd distinct pi·E'ference for leather goods that arc manufactured from top grain leather. Split leather goods can be made to resemble top grain leather in a ppcarance and the purchasing public generally and. a pnbstantial portion of the trade cannot <listingnish h\'t\H'I'n !'split leather goods and top grain leather goods. As a rrsult thereof, split leather goods are thus passed off as top grain leatlwr gomls. PAn. 4. The descriptions, representations, stamps, an<l brands used by respondents in describing their split leather luggage are false and mis]NHling in that said. luggage branded as "\VARRANTED GEN'· UINE I .. EA TilER" an<l "WARRANTED LEATHER" is not made from the outside or top side of the hide, or what is understood in the trade and by the purchasing public as top grain, but are manufactured. from split leather.

PAn. 5. The use by respondents of the <lescriptions, marks, and brands, set out in paragraph 2 hereof, to describe their split lea.ther luggage, o:ITere<l for sale and sol<l in interstate commerce, has had and does have the capacity and tendency to mislead and deceive the purchasing public una a substantial portion of the trade into the erroneous belief that the luggage so branded and labeled was made from top grain leather. By said practices, respondents also place in the hands of wholesalers and retailers the means whereby said luggage is passed off to the purchasing public as top grain leather luggage. As a direct consequence of the mistaken and erroneous be· liefs induced by the false and misleadin..., representlltions above re· fen·pd to, the consuming public has purcltased 11. substantial volume of respondents' luggage with the result that tra<le has been unfairly I· EVERLAST SUIT CASE & BAG CO. 747 742 Order diverted to the respondents from their competitors likewise en(l'aged in the manufacture, sale, and distribution of leather lu(l'(}'a(leo who truthfuUy brand and represent the kmd• of leather used in00the0'manufacture of their products. As a result thereof, substantial injury has been and is now being done by respondents. to competition ' in commerce, among and between the varwus States of the United States and in the District of Columbia.

CONCLUSION The aforesaid acts and practices of the respondents, Israel Zaveloff anll Harry Bernstein, trading as Everlast Suit Case & Bag Company, are to the prejudice of the public and respondents' competitors, and constitute unfair methods of competition in commerce, 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 procee(lin'yM havin(l'I'> bNm heard by the Federal Trade Commis- Slou upon the complaint of the Commission, the answer of respondent, testimony and other evidence taken before John L. Hornor, an examiner of the Commission theretofore duly designated by it, in support of the allegations of said complaint and in opposition thereto, and briefs filed herein (no oral argument having been made), 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 2G, 1914, entitled, "An Act to create a Federal Trade Commission, to define its powers and du6es, and for other purposes."

It is ordered, That the respondents, Israel Zavelo:ff and Harry BernFitein, individual11y or trading as Everlast Suit Case & Bag Com- Pany, or under any other trade name, their representatives, agents, servants, and employees, in connection with the o:fferin~ for sale, sale, and distribution of luO'O'UO'e,.,,., ,., in interstate. commerce or m the District 0 f C epr£>sentin•r n olumLia ' do forthwiththrotJO'h0 theceaseuseandof desistthe wordsfrom:"genume. leather" or''1 ol • '1 . d ff eat her" or any other worn or words of s1m1 ar 1m port an e ect, alone 0l' in conjunction with other words, stamped or imprinted on labels 0l' on the ]umra()'e itself or in any other manner, that luggage manu-f. ol'> ,., ' • ~ctul'l'd in whole or in part from the underlayers or flesh side of h~(lf's, known ns split leather, is made from the outside layer of the hide 748 FEDERAL TRADE COl\Il\IISSION DECISIONS Ord<'r 25F. T. C.

It is further ordered, That the respondent shall, within 60 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.

DONAHUE ADVERTISING CO. 749 Syllabus E. I. DONAHUE, INDIVIDUALLY AND TRADING AS DONAHUE ADVERTISING COMPANY COMPLAI:"<T, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATIO:-. OF SP.C, l:i OF AN ACT OF CONGRESS APPROVED SEPT, 26, 1914 Ducket 8180. Complaint, July 21, 1931-Dccision, A uu. 11, 1931 Where au individual engaged in sale and distribution of various articles of merchandise, Including, among others, electric clocks, kitchen cutlery sets, tableware !Wts, hostess tray sets and grill, vacuum cot'fee sets, and other articles, in commerce among the various States- Furnished various devices and plans of merchandising which involved operation of gift enterprises or lottery schemes and distribution of his said merchandise to ultimate consumers wholly by lot or chance, and consisted of variety or push ca1·ds for sale and distribution, substautlally, under a plan or method, and in accordance with said cards' explanatory legends, by which pl'08ll!'Ctive purchasers selecting one of a \"variety of girls' namefl displayed on card paid up to certain maximum amount In accordnnct! with numher dlsclo:-;ed under name selected, and received article of merchandise being thus dil'lposed or, or nothing other than privilege of undertaking such chance selection, in accordance with their success or failure in selecting name corresponding to that concealed under card's master seal, and under which person, salesman, agent or representative soliciting pm·chases of chances was similarly compensated, after completing sales thereof, by receipt of article or merchandise without further charge or additional service, and thereby supplied to and placed in the baud~ of others the means of conducting lotteries In the sale or hi~ merehundiHe, iu accordance with such sales plan as here1uabo¥e J;et forth, in violation of public policy long recognized in the common law nnu criminal statutes and contrary to an established public policy of the United Stutes Go\·ernment, and In competition with many who make or sell merchanuise as above described but are unwilling to adopt and use said or any method involving game of chance or sale of a chance to win something by chance or any other method contrary to public policy, and refrain therefrom;

'With result that many persons were attracted by his said methods and element of chance tnvoh·ed fn sale in manner above described, and were thereby lnduePd to bu:v and t;ell hifl said merehaudise In preference to that offers£1 auu sold by s~id competitors who do not use same or equivalent methods, and with l'frect, by reason of said game of chanl'e, of diverting trade aml <'Uiitom to him from his said competitors who do not use same or equlvai<'nt methods:

licld, 'that such acts tlnd prnetlcrs were to the prejudice of the public and competitors and constituted unfair methods of competition. Mr. llenry C. La11lt~ and Jfr. P. 0. J{olinski for the Commission. 750 FEDERAL TRADE COl\IMISSION DECISIONS Complaint 25 F. T. C. 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 E. I. Donahue, individually and trading as Donahue Advertising Company, hereinafter referred to as respondent, has been and is using unfair methods of competition in commerce, as "commerce" is defined in said act, and it appearing to said 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 is an individual doing business under the trade name and style of Donahue Advertising Company, with his principal office and place of business located at 407 South Dearborn Street, Chicago, Ill. He is now, and for some time last past has been, engaged in the sale and distribution of various articles of merchandise, including, among others, electric clocks, kitchen cutlery sets, tableware sets, hostess tray sets and grill, vacuum coffee sets, roaster sets, smoking stands, ashtray combinations, and pen and pencil sets, in commerce between and among the various States of the United States. He causes and has caused said products when sold to be transported from his principal place of business in the State of Illinois to purchasers thereof in Illinois and in other States of the United States at their respective points of location. There is now, and has been for some time last past, a course of trade and commerce by said respondent in such merchandise as he is selling or distributing between and among the States of the United States. In the course and conduct of said business, respondent is in competition with other individuals and with partnerships and corporations engaged in the sale and distribution of similar or like articles of merchandise in commerce between and among the various States of the United States.

PAR. 2. In the course and conduct of his business, as described in paragraph 1 hereof, the re~pondent, in soliciting the sale of and in selling and distributing the said merchandise, has furnished various devices and plans of merchandising which involve the operation of gift enterprises or lottery schemes and a distribution of such merchandise to the ultimate consumers thereof wholly by lot or chance. Said devices or plans of merchandising consist of a variety of push cards, the use of which, in connection with the sale and delivery to the purchasing public by the method or plan suggested by respondent, was and is substantially as follows:

DONAHUE ADVERTISING CO. 751 i49 Complaint The said push cards bear a number of girls' names. Concealed under each name is a number. Also, under a master seal there is a name corresponding to one of the names on the card. Prospective purchasers select one of the names and remove the same disclosing the number thereunder. Persons selecting numbers from 1 to 29 pay in cents the amount of such number, and persons selecting numbers over 29 pay 29¢ for the privilege of selecting one of the names. The push cards bear various legends informing purchasers and prospective purchasers of the plan or method by which said push card is operated and by which the merchandise described thereon is to be distributed. When all the names have been purchased the master seal is removed, and the person who has selected the name corresponding to the name under the master seal receives the article of merchandise described without further charge, and the person, salesman, agent, or representative soliciting purchases of chances, as above described, also receives an article of merchandise without further charge or additional service. The numbers under the names are concealed from purchasers and prospective purchasers, and they do not know how much they will have to pay for the privilege of selecting one of the names until the selection has been made and the name removed. The name under the master seal is concealed from purchasers and prospective purchasers until all the names have been selected. Those customers selecting names which do not correspond to the name under the master seal receive nothing but the privilege of making a selection for the money which they pay, The said articles of merchandise vary in value, but each of said articles of merchandise is of a greater value than the cost of a single push from said push card. The various articles of merchandise are thus distributed to the purchasing public wholly by lot or chance, and the amount which the customers pay for a chance is determined wholly by lot or chance.

PAn. 3. The persons to whom respondent furnishes said devices use the same in purchasing, selling, and distributing respondent's merchandise in accordance with the aforesaid sales plan. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of his merchandise in accordance with the sales plan hereinabove set forth. The use by respondent of said method in the sale of his merchandise, and the sale of such merchandise by and throu()'h the use thereof and by the aid of said method Is• a practice of theb sort which the common law and criminal statutes' have long deemed contrary to public policy, and is contrary to an established public policy of the Government of the United States. 15Sl2tm--sn----5o Co:\Il\IISSIO~ DECISION'S752 FEDERAL TRADE Findings 25F. T. C.

PAR. 4. The sale of merchandise to the purchasing public in the manner above alleged involves a game of chance or the sale of a <:hance to procure articles of merchandise at a price much less than the normal retail price thereof. Many persons, firms, and corporations who make or sell merchandise in competition with the respondent, as above alleged, are unwilling to adopt and use said method or any method involving a game of chance or the sale of a chance to win something by chance, or any other method that is contrary to public policy, and such competitors refrain therefrom. Many persons are attracted by respondent's said methods and by the element of chance involved in the sale thereof in the manner above described, and are thereby induced to buy and sell respondent's merchandise in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the same or equivalent methods. The use of said method by respondent, because of said game of chance, has the tendency and capacity to, and does, divert trade and custom to respondent from his said competitors who do not use the same or equivalent methods. PAR. 5. The aforesaid acts and practices of respondent are all to the injury and prejudice of the public and of rpspondents competitors, and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 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."

REI'ORT, FINDINGS AS TO THE F ACTR, AND OnuER Pursuant to the provisions of an Act of Congresst 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, on July 21, 1937, issued and on July 22, 1937, served its complaint in this proceeding upon respondent, E. I. Donahue, individually and trading as Donahue Ad,·ertising Company, charging him with the use of unfair methods of competition in commerce in violation of the provisions of said act. After the issuance of said complaint, respondent filed answer thereto, dated .July 28, 1937, admitting the facts as alleged in the said complaint to be true. Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and answer thereto, 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:

DONAHUE ADVERTISING CO, 753 t49 Findings FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent is an individual doing business under the trade name and style of Donahue Advertising Company, with his principal office and place of business located at 407 South Dearborn Street, Chicago, Ill. He is now, and for some time last past has been engaged in the sale and distribution of various articles of merchandise including, among others, electric clocks, kitchen cutlery sets, tableware sets, hostess tray sets and grill, vacuum coffee sets, roaster sets, smoking stands, ashtray combinations, and pen and pencil sets, in commerce between and among the various States of the United States. He causes and has caused said products when sold to be transported from his principal place of business in the State of Illinois to purchasers thereof in Illinois and in other States of the United States at their respective points of location. There is now, and has been for some time last past a course of trade and commerce by said respondent in such merchandise as he is selling or distributing between and among the States of the United States. In the cour::;e and conduct of said business, rt!spondent is in competition with other individuals and with partnerships and corporations engaged in the sale and distribution of similar or like articles of merchandise in commerce between and among the various States of the United States.

PAR. 2. In the course and conduct of his business, as described in paragraph 1 hereof, the respondent in soliciting the sale of and in selling and distributing the said merchandise, has furnished various devices and plans of merchandising which involve the operation of gift enterprises or lottery schemes and a distribution of such merchandise to the ultimate consumers thereof wholly by lot or chance. Said devices or plans of merchandising consist of a variety of pushcards, the use of which, in connection with the sale and delivery to the purchasing public by the method or plan suggested by respondent, was ancf is substantially as follows:

The said push cards bear a number of girls' names. Concealed under each name is a number. Also, under a master seal there is a name corresponding to one of the names on the card. Prospective purchasers select one of the names and remove the same disclosin(J' the number thereunder. Persons selecting numbers from 1 to 20 pay in cents the amount of such number, and persons selecting numbers over 29 pay 2!l¢ for the privilege of selecting one of the names. The push curds Lear various legends informing purchasers and prospective purchasers of the plan or method by which said push card is operated and by which the merchandise described thereon is to be Findings 25F.T.C.

distributed. When all the names have been purchased the master seal is removed, and the person who has selected the name corresponding to the name under the master seal receives the article of merchandise described without further charge, and the person, salesman, agent, or representative soliciting purchases of chances, as above described, also receives an article of merchandise without further charge or additional service. The numbers under the names are concealed from purchasers and prospective purchasers, and they do not know how much they will have to pay for the privilege of selecting one of the names until the selection has been made and the name removed. The name under the master seal is concealed from purchasers and p-rospective purchasers until all the names have been selected. Those customers selecting names which do not correspond to the name under the master seal receive nothing but the privilege of making a selection for the money which they pay. The said articles of merchandise vary in value, but each of said articles of merchandise is of a greater value than the cost of a single push from said push card. The various articles of merchandise are thus distributed to the purchasing public wholly by lot or chance, and the amount which the customers pay for a chance is determined wholly by lot or chance.

PAR. 3. The persons to whom respondent furnishes said devices use the same in purchasing, selling, and distributing respondent's merchandise in accordance with the aforesaid sales plan. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of his merchandise in accordance with the sales plan hereinabove set forth. The use by respondent of said method in the sale of his merchandise and the sale of such merchandise by and through the use thereof and by the aid of said method, is a practice of the sort which the common law and criminal statutes have long deemed contrary to public policy, and 'is contrary to an established public policy of the Government of the United States. PAR. 4. The sale of merchandise to the purchasing public in the manner above found involves a game of chance or the sale of a chance to procure articles of merchandise at a price much less than the normal retail price thereof. Many persons, firms, and corporations who make or sell merchandise in competition with the respondent, as above described, are unwilling to adopt and use said method or any method involving a game of chance or the sale of a chance to win something by chance, or any other method that is contrary to public policy, and such competitors refrain therefrom. Many persons are attracted by respondent's said methods and by the element of chance involved in the sale thereof in the manner above described, DONAHUE ADVERTISING CO. 755 749 Order and are thereby induced to buy and sell respondent's merchandise in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the same or equivalent methods. The use of said method by respondent, because of said game of chance, has the tendency and capacity to, and does, divert trade and custom to respondent from his said competitors who do not use the sttme or equivalent methods.

CONCLUSION The aforesaid acts and practices of the respondent, E. I. Donahue, iudividually and trading as Donahue Advertising Company, are to the prejudice of the public and of respondent's competitors, and constitute unfair methods of competition in commerce within the intent and meaning of Section 5 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." ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission on the complaint of the Commission and the answer of j,,~ the respondent dated July 28, 1937, admitting the £acts as set forth I,, in the complaint to be true, 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 m·der·ed, That the respondent E. I. Donahue, individually and trading as Donahue Advertising Company, his agents, representatives, and employees, in connection with the offering for sale, sale and distribution of merchandise in interstate commerce, do forthwith cease and desist from:

1. Supplying to or placing in the hands of others push cards or similar devices for the purpose of enabling such persons to dispose of or sell such merchandise by the use thereof. 2. .Mailing, shipping or transporting to members of the public push cards or similar devices so prepared or printed as to enable said P~rsons to sell or distribute such merchandise by the use thereof. 8. Selling or otherwise disposing of merchandise by the use of push cards or similar devices.

4. In any manner, selling or otherwise disposing of merchandise, free of charge, or at varying prices, depending upon lot or chance. Order 25F.T.C.

It is further ordered, /that the respondent E. I. Donahue, indi~ vidually and trading as Donahue Advertising Company, shall, within 30 days after service upon him of this order, file with the Commission a report in writing setting forth in detail the manner and form in which he has complied with the order to cease and desist herein~ above set forth.

• I II ~ I'' CARLTON SALES CO. 757 I• Syllabus