Altman, Morris S., et al.

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IN THE MATTER OF l\IORBEN HAT WORKS, INC., AND MORRISS. ALTMAN COl\IPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docl,,et 3838. Complaint, June 28, 1939-Dccision, Sept. 18, 1939 \Vllere a corporation and an individual, who was an officer thereof and principal stockholder therein, and managed, controlled, and dominated its affairi! and activities, engaged in manufacture of hats from old, worn, and usetl felt hats purchased by them, and so treated and procpssed, through clealing, steaming, ironing, and shaping and, in some instances, fitting same with new trimmings, sweat bands, and size labels, that they had the appearance of new products made from felts which had never been worn- Sold said products, with appearance aforesaid, and with no label, marking, or designation stamped thereon to indicate to purchasing public that they were made from old, worn, and previously used felt bat bodies which had been cleaned and renovated by them, to jobbers, wholesalers, and retaill'l'S who sold, as buyers direct or from said jobbl'rs and wholesalers, to purchasing public said products, without disclosing fact that such hats were made as aforesaid, and under such circumstances as to indicate that they were in fact new bats;

With effect of misleading and deceiving subfltantial number of wholesalerf!, jobbers, retail!'rs, and members of purchasing public into erroneous and mistaken beli!'fs that said products wre made from either new and unused mat!'rials or from new, but shopworn hat bodies, cleaned, ~;teamed, and renovated by mimufacturl'rs therl'of in manner similar to that l'mployed in conn!'ct!on with those made from old, worn, and previously used felt bodies, and into purchase of substantial number of such bats because of said erroneous and mistaken bi'Jief:

Ileld, That such acts and practices, under the circumstances set forth, were all to the prejudice of the public and constituted unfair and deceptive acts and practices in commerce.

Before Mr. John L. Hornor, trial examiner. Mr. Robert J,fathis, Jr. for the Commission. Coj.rPLAINT Pursuant to the provisions of the Federal Trade Commission Act, and by virtue of the authority vested in it by said act, the Federal Trade Commission, having reason to believe that :Morben Hat w·orks, Inc., a corporation, and Morris S. Altman, individually and as an officer of said l\Iorben Hat 'Vorks, Inc., hereinafter referred to as respondents, have violated the provisions of said act, and it appearing to the Commission that a proceeding by it in respect thereof MOREEN HAT WORI\:S, INC., ET AL. 965 Complaint would be in the public interest, hereby issues its complaint, stating its charges in that respect as follows:

PARAGRAPH 1. Respondent, Morben Hat "\Vorks, Inc., is now and has been at all times mentioned herein, a corporation, existing and doing business under and by virtue of the laws of the State of New York. Respondent Morris S. Altman is an individual and an officer and the principal stockholder of resp.ondent Morben Hat vVorks, Inc., and as such manages, controls and dominates its corporate affairs and activities. All of said respondents have their office and principal place of business at 162 Green Street, in the city and State of Ne:w York. Respondents are now, and for more than 1 year last past have been engaged in the business of manufacturing hats from felts and other materials obtained from old, worn and previously used hats and of selling the same to retailers, jobbers, and wholesalers located in the various States of the United States and in the District of Columbia. Respondents cause, and at all times herein mentioned have caused, such hats to be transported from their place of business in the city and state of New York to the aforesaid purchasers thereof, at their respective points of location in various States of the United States other than the State of New York and in the District of Columbia.

PAR. 2. In the course and conduct of sitid business, described in paragraph 1 hereof, respondents buy old, worn, and used felt hats. The old, worn, and used felt hats are cleaned, steamed, ironed, and shaped by respondents and then in some instances are fitted with new trimmings, sweat bands, size labels, and sold by respondents to retailers who, in turn sell said products to the purchasing public. PAR. 3. The aforesaid, old, worn, and previously used hat bodies, after having been cleaned and renovated by respondents as described in paragraph 2 hereof, have the appearance of new hats manufactured from felts which have never been worn, and said hats are sold by respondents to retailers, and to jobbers and wholesale dealers without any label, marking, or designation stamped thereon to indicate to the purchasing public that saia hats are manufactured from old, worn, and previously used felt hat bodies, which have been cleaned and renovated by respondents. Said hats are sold to jobbers and wholesale dealers and are resold by said jobbers and wholesale dealers to retail dealers, who sell them to the purchasing public without disclosing the fact that said hats are manufactured from felts, previously worn, and then cleaned and renovated, and under such circumstances as to indicate that they are in fact new hats. FEDERAL TRADE CO:Ml\IIS.SION DECISIO~S966 Findings 29 F. T. C, It is the practice of various manufacturers of hats to manufacture finished hats from previously used hat bodies, and from new felt hat bodies, obtained from new but shop-worn hats, as well as from newly manufactured felt. Shop-worn hats are new hats which are reclaimed from merchants' shelves by said hat manufacturers, and which have never been worn or used. Said shop-worn hats are cleaned, steamed, and renovated by such hat manufacturers in the same manner as hats made from old, worn, and previously used felt hat bodies.

PAR. 4. The use by respondents of the acts and practices, above set forth, has the capacity and tendency to, and does, mislead and deceive a substantial number of wholesale dealers, jobbers, retail dealers, and members of the purchasing public into the erroneous and mistaken beliefs that the said hats are manufactured from either new and unused materials, or are made from new but shop-worn hat bodies, and into the purchase· of a substantial number of said hats because of such erroneous and mistaken beliefs. P .AR. 5. The aforesaid acts and practices of the respondents as herein alleged are all to the prejudice of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE FACTS, AND Onder Pursuant to the- provisions of the Federal Trade Commission Act, the Federal Trade Commission, on the 28th day of June, A. D. 1939, issued and served its complaint in this proceeding upon the respondents, Morben Hat 1Vorks, Inc., a corporation, and Morris S. Altman, individually and as an officer of Morben Hat 1Vorks, Inc., charging them with the use of unfair and deceptive acts and practices in commerce in violation of the provisions of said act. On August 23, 1939, the respondents filed their answer, in which answer they admitted all the material allegations of fact set forth in said complaint and waived all intervening procedure and further hearing as to said facts. Thereafter, the proceeding regularly came on for final hearing before the Commission on the said complaint and the answer thereto, and the Commission, having duly considered the matter, 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 PARAGRAPH 1. Respondent, l\Iorben Hat 1Vorks, Inc., is now and has been at all times mentioned herein, a corporation, existing nnd 1\:IORBEN HAT WORKS, INC., ET AL. 967 964 Findings doing business under and by virtue of the laws of the State of New York. Respondent Morris S. Altman is an individual and an officer and the principal stockholder of respondent l\Iorben Hat 'Vorks, Inc., and as such manages, controls, and dominates its corporate affairs and activities. All of said respondents have their office and principal place of business at 1()2 Green Street, in the city and State of New York. Respondents are no,v, and for more than 1 year last past have been, engaged in the business of manufacturing hats from felts and other materials obtained from old, worn, and previously used hats and of selling the same to retailers, jobbers, and wholesalers located in the various States of the United States and in the Distric-t of Columbia. Respondents cause, and at all times herein mentioned have caused, such hats to be transported from their place of business in the city and State of New York to the aforesaid purchasers thereof, at their respective points of location in various States of the United States other than the State of New York and in the District of Columbia.

PAR. 2. In the course and conduct of said business, described in paragraph 1 hereof, respondents buy old, worn, and used felt hats. The old, worn, and used felt hats are cleaned, steamed, ironed, and shaped by respondent and then in some instances are fitted with new trimmings, sweat bands; size labels, and sold by respondents to retailers who, in turn, sell said products to the plirchasing public. PAR. 3. The aforesaid old, worn, and previously used hat bodies, after having been cleaned and renovated by respondents as described in paragraph 2 hereof, have the appearance of new hats manu· factured from felts which have never been worn, and said hats are r<old by respondents to retailers, and to jobbers and wholesale dealers without any label, marking, or designation stamped thereon to indicate to the purchasing public that said hats are manufactured from old, worn, and previously used felt hat bodies, which have been cleaned and renovated by respondents. Said hats are sold to jobbers and wholesale dealers and are resold by said jobbers and wholesale dealers to retail dealers, who sell them to the purchasing public without disclosing the fact that said hats are manufactured from felts, previously worn, and then cleaned and renovated, and under such circumstances as to indicate that they are in fact new hats. It is the practice of various manufacturers of hats to manufacture finished hats from previously used hat bodies, and from new felt hat bodies, obtained from new but shop-worn hats, as well as from newly manufactured felt. Shop-worn hats are new hats which are reclaimed from merchants' shelves by said hat manufacturers, and which have never been worn or used. Said shop-worn hats are Order !DF.T.C.

cleaned, steamed, and renovated by such hat manufacturers in the same manner as hats made from old, worn, and previously used felt hat bodies.

PAR. 4. The use by respondents of the acts and practices, above set forth, has the capacity and tendency to, and does, mislead and deceive a substantial number of wholesale dealers, jobbers, retail dealers, and members of the purchasing public into the erroneous and mistaken beliefs that the said hats are manufactured from either new and unused materials, or are made from new but shop-worn hat bodies, and into the purchase of a substantial number of said hats because of such erroneous and mistaken beliefs.

CONCLUSION The aforesaid acts and practices of the respondents as herein found are all to the prejudice of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission upon the complaint of the Commission and the answer of respondents, in which answer respondents admit all the material allegations of fact set forth in the said complaint and state that they waive all intervening procedure and further hearing as to said facts, and the Commission having made its findings as to the facts and conclusion that said respondents have violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respon~ent Morben Hat 'Works, Inc., a corporation, its officers, representatives, agents, and employees, and respondent Morris S. Altman, individually and as an officer of said corporation, his representatives, agents, and employees, directly or through any corporate or other device in connection with the offering for sale, sale, and distribution of hats in commerce as commerce is defined in the Federal Trade Commission Act, do forthwith cease and desist from :

1. Representing that hats composed in whole or in part of used or second-hand materials are new or are composed of new materials by failure to stamp on the sweat bands thereof, in conspicuous and legible terms which cannot be removed or obliterated without mutilating said sweat bands, a statement that said products are composed of second-hand or used materials, provided that if sweat bands are not affixed to such hats then such stamping must appear on the bodies :l\IORBEN HAT WORKS, INC., ET AL. 969 Order of such hats in conspicuous and legible terms which cannot be removed or obliterated without mutilating said bodies. 2. Representing in any manner that hats made in whole or in part from old, used, or second-hand materials are new or are composed of new materials. . It is further m•dered, That respondents shall, within GO days after service upon them of this order, file "·ith the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order.

970. FEDERAL TRADE COMllliSSION DECISIONS Syllabus 29F. T. C.