Miller, Charles W

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

IN THE 1\fATI'ER ORA R. YATES AND CHARLES W. MILLER, TRADING AS MONARCH PRINTERS AND BINDERS Monarch PruNTEns & BINDERS COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. II OF AN ACT OF CONGRESS APPROVED SEPT. 21i, 1914 Docket -4339. Oomplatint, Oct. 9, 1940-Decision, Aug. 20, 1941 Where two individuals engaged in competitive interstate sale and distri.butlon of sales promotion cards so designed and arranged as to involve the use of games of chance, gift enterprises, or lottery schemes when used by dealers in promoting and increasing sales of their merchandise to consuming public, typical one involving plan, as explained on card, under which customer or dealer using such cards was entitled to a "Treasure Chest receipt" with each 25 cents spent, and had the option, upon the pasting of such receipts on the 100 spaces provided on the card, of receiving cash redemption value of 15 cents or of exchanging the card for articles of merchandise or cash awards varying from 50 cents to $5 called for by legend under card's seal- ( a) Sold such cards to wholesalers and jobbers and, directly and indirectly, to retailers, who distributed them to customers and honored awards as. shown when seals were broken, in accordance with above plan, and thereby supplied to and placed In the hands of others the means of conducting lotteries in the sale of their merchandise, contrary to an established public policy of the United States Government and in violation of criminal laws, and in competition with many who, unwilling to oler or sell cards or devices so designed and arranged as to involve a game of chance, gift enterprise, or lottery scheme, refrain therefrom; , With the result that the consuming public was induced to purchase merchandise from dealers using their cards in preference to those using devices of their competitors, because of said game of chance, ·and dealers were consequently induced to purchase their said cards in preference to devices of their competitors, and with effect of unfairly diverting trade in commerce .to them from their said competitors, to the injury of competition in commerce; and (b) Represented that they were printers and binders of their said merchandise, owning, operating, and controlling the plant in which it was printed and bound, through using words "Printers and Binders" in their trade , name set: forth on display cards, letterheads, said sales-promotion cards and other printed matter which they caused to be distributed; When, In fact, they filled orders with merchandise which was printed and bound in a plant which they did not own, operate, or control, and were not printers and binders, preferentially dealt with by substantial portion of the consuming public and dealers as affording, in their belief, lower prices, elimination of middlemen's profits, superior products, and other advantages; With tendency and capacity to mislead and deceive prospective purchasers into the belief that they were the printers and binders of their merchandise, and to cause them to buy their said articles because of such mistaken and erroneous belief:

Held, That such acts and practices, under the circumstances set forth, were au to the prejudice and injury of the public and competitors, and constl- • Complaint 33 F.T. C. tuted unfair methods ot competition in commerce and unfair and deceptive acts and practices therein. ' Before Mr. lV. W. Sheppard, trial examiner. Mr. L. P. Allen, Jr., and Mr. J. V. Jluhou for the Commission. Reams, Bretherton & Neipp, of Toledo, Ohio, for respondents. Co-MPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said act, the Federal Trada Commission having reason to believe that Ora R. Yates and Charles W. :Miller, individually and trading as :Monarch Printers and Binders, 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 would be in the interest of the public, hereby issues its complaint, stating its charges in that respect as follows:

PARAGRAPH 1. Respondents, Ora R. Yates and Charles W. :Miller, are individuals trading as Monarch Printers and Binders, with their principal office and place of business located at 812 Hunt Street, Adrian, Mich. Respondents are now and for more than 3 years last past have been engaged in the sale and distribution of sales-promotion cards and other articles of merchandise to wholesale dealers, jobbers, and retail dealers. Respondents cause and have caused said merchandise, when sold, to be transported from their aforesaid place of business in the State of Michigan to purchasers thereo,f, at their respective points of location, in the various States of the United States other than Michigan and in the District of Columbia. There is now and for more than 3 years last past has been a course of trade by respondents in such merchandise in commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of their business, respondents are and have been in competition with other individuals and with partnerships and corporations engaged in the sale and distribution of like or similar merchandise in commerce between and among the various States of the United States and in th,e District o£ Columbia. PAR. 2. In the course and conduct of their business, as. described in paragraph 1 hereof, respondents sell and have sold cards so designed and arranged as to involve the use of games of chance, gift enterprises, or lottery schemes when used by dealers in promoting and increasing sales of their merchandise to the consuming public. A sales-promotion card in one such group is herein described for the purpose of showing arrangement, design, and principle involved. MONARCH PRINTERS AND BINDERS 1073 1071 Complaint The said card contains 100 ruled spaces for pasting thereon receipts which are given by the said dealers to customers with each 25-cent purchase. The card contains a. legend or instructions as follows: TREASURE CHEST Plan and Governing Rules You will be given one TREASURE chest receipt with each 25¢ spent with us. 13e sure to paste receipts in this booklet. Under the seals of some TREASURE <:BEST booklets are listed valuable Food products. Under the others Is listed cash In amounts of 50¢, $1, $2, or $5. THERE ARE NO BLANKS! When completely filled with 100 receipts, return this booklet to us with the Seal unbroken. This booklet wlll then have a cash redemption value of 15¢. We will then break the Seal on page 2 that you may see what is printed under It and, if you wish, you tnay exchange the cash redemption value for whatever the opening of the Seal discloses. NO DRAWINGS-NO JUDGINGS-NO DISAPPOINTMENTS ) This booklet accepted subject to above conditions The prizes or premiums are allotted to the said customers or purehasers in accordance with the above legend or instructions. Under the seal is the following legend:

llb.

Porn co Vac. Can Coffee 2 cans Pomco Tall Milk ·The articles of merchandise called for under the said seals vary 'With the individual card and the cash awards vary from 50 cents to $5. The legend under the seal is effectively concealed until the seal has been opened and the amount which the holder of said card will receive in merchandise or cash is thus determined wholly by lot or chance.

The respondents sell and distribute and have sold and distributed various sales-promotion cards which involve the use of games of chance, gift enterprises, or lottery schemes when used by dealers to Promote the sale of their merchandise to the consuming public. Such cards are similar to the one hereinabove described and vary only in detail.

Respondents furnish their customers with various display posters and advertisements to be used by retail merchants in distributing and Using said cards. • PAR. 3. Sales of assortments of said sales-promotion cards are and have been made to wholesale dealers, jobbers, and retail dealers. The Complaint 33F.T.C.

retail dealers who directly or indirectly purchase respondents' said cards distribute .the same to their customers and prospective customers and honor the awards as shown when the seals are broken open in accordance with the plan hereinabove set forth. The respondents thus supply to, and place in the hands of, others the means of and instrumentalities for conducting lotteries in the sale of their merchandise in accordance with the sales plan hereinabove set forth. The use by respondents of said method in designing and arranging their said cards and distributing the same for redistribution to the public is a practice of a sort which is contrary to an established public policy of the Government of the United States and in violation of criminal Ia ws.

PAR. 4. There are in competition with respondents various manufacturers and distributors of sales-promotion cards, premium cards, price concession cards, coupons, and trading stamps, which when used by dealers do not involve a lottery scheme, game of chance, or a gift enterprise. Many persons, firms, and corporations who sell and distribute various cards or devices for promoting or increasing the sales of dealers are unwilling to offer for sale or sell cards or devices so designed and arranged as above alleged, or otherwise designed and arranged as to involve a game of chance, gift enterprise, or lottery scheme, and such competitors refrain therefrom. The consuming public is induced to deal with or purchase merchandise from dealers using respondents' cards in preference to purchasing _merchandise from dealers using the devices of respondents' competitors because of the games of chance, gift enterprise, or lottery scheme connected with respondents' said cards. By reason thereof dealers are induced to purchase respondents' said cards in preference to devices of competitors of the respondents. The use by respondents of said method in designing and arranging their said cards and dist~ibuting them as aforesaid because of said game of chance has a tendency and capacity to and does unfairly divert trade in commercfl between and among the various States of the United States and in the District of Columbia to respondents from their said competitors who do not use the same or equivalent methods, and as a result thereof injury is being and has been done by respondents to competition in commerce between and among the various States of the United States and in the District of Columbia. PAR. 5. In the course and conduct of their business as aforesaid, respondents in soliciting the sale of and in selling their merchandise, as above described, have caused display cards, letterheads, the afore· said sales-promotion cards, and other printed matter to be distributed MONARCH PRINTERS AND BINDERS 1075 , 1071 Findings through the United States mail and by other means to customers and prospective customers located in States other than the State of Michigan and in the District of Columbia. The aforesaid printeq matter contains thereon the firm name of the respondent, Monarch Printers and Binders. The use of the words "Printers and Binders" in respondents' firm name serves as a representation that respondents are the printers and binders of their aforesaid merchandise and that respondents own and operate or control the plant wherein such Iherchandise is printed and bound.

PAn. 6. In truth and in fact, respondents do not own, operate or control a plant for the printing and binding of sales-promotion cards and other merchandise which they sell and distribute, as herinabove alleged, but respondents have filled and now fill orders for such ~articles of merchandise with merchandise which is printed and bound In a plant which they neither own, operate, nor control. PAn. 7. There has long been a preference on the part of a substantial Portion of the purchasing and consuming public and of dealers for dealing directly with a printer and binder, such preference being due in part to a belief that lower prices, elimination of middlemen's Profits, superior products, and other advantages can thereby be obtained.

PAn. 8. The use by the respondents of the words "Printers and Binders" in their firm name, as hereinabove alleged, has had and now has the tendency and capacity to mislead and deceive purchasers and Prospective purchasers by causing them mistakenly and erroneously to believe that the respondents are the printers and binders of such Iherchandise and own and operate or control the plant wherein such Iherchandise is printed and bound, and to purchase respondents' articles on account of such mistaken and erroneous belief. PAn, 9. The aforesaid acts and practices of the respondents, as herein alleged, are all to the prejudice and injury of the public and of respondents' competitors ~nd constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in Coinmerce within the intent and meaning of the Federal Trade Commission Act.

Report, FINDINGs AS TO THE FAor~, AND Onder Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on October 9, 1940, issued and subsequently served its complaint in this proceeding upon the respondents, Ora R. Yates and Charles ,V, Miller, individually and trading ns M:onarch Printers and Binders, charging them with the use of unfair Findings 33 F. T. C. methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of the provisions of said act. After t]le issuance of said complaint ald the filing of respondents' answer thereto, testimony and other evidence in support of the allegations of said complaint were introduced by L. P. Allen, attorney for the Commission, and in opposition to the allegations of the complaint by Frazier Reams, attorney for the respondents, before "'\V. W. Sheppard, a trial examiner of the Commission theretofore duly designated by it (which testimony and other evidence consisted of a stipulation of facts upon the record supplementing the answer filed by the respondents), and said testimony and other evidence were duly recorded and filed in the office of the Commission. Thereafter, this proceeding regularly came on for final hearing before the Commission on said complaint, answ.er thereto, testimony and other evidence, report of the trial examiner upon the evidence, and brief in support of the complaint (no brief having been filed by the respondents or oral argument requested), a:nd 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 :PARAGR.APH 1. Respondents, Ora R. Yates and Charles W. Miller, are individuals trading as Monarch Printers and Binders, with their principal office and place of business located at 812 Hunt Street, Adrian, Mich. Respondents are now, and :for more than 3 years last past have been, engaged in the sale and distribution of salespromotion cards and other articles of merchandise to wholesale dealers, jobbers, and retail dealers. Respondents cause and have caused said merchandise, when sold, to be transported from their aforesaid place of business in the State of Michigan to purchasers thereof, at their respective points of location, in the various States of the United. States other than Michigan and in the District of Columbia. There is now, and for more than 3 years last past has been, a course of trade by respondents in such merchandise in commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of their business, respondents are and have been in competition with other individuals and with partnerships and corporations engaged in the sale and distribution of like or similar merchandise in commerce between and among the various States of the United States and in the District of Columbia.

MONARCH PRINTERS AND BINDER~ 1077 1071 Findings PAR. 2. In the course and conduct of their business, respondents sold cards so designed and arranged as to involve the use of games ?f chance, gift enterprises, or lottery schemes when used by dealers In promoting and increasing sales of their merchandise to the consuming public. A sales-promotion card in one such group is herein described for the purpose of showing arrangement, design, and principle involved. The said card contained 100 ruled spaces for pasting thereon receipts which were given by the said dealers to customers With each 25-cent purchase. The card contained a legend or instructions as follows:

TREASURE CHEST Plan and Governing Rules You wlll be given one TREASURE CHEST receipt with each 25¢ spent with us. Be sure to paste receipts in this booklet. Under the seals of some TREASURE CliEsT booklets are listed valuable Food products. Under the others is listed cash In amounts of 50¢, $1, $2, or $5. THERE, ARE NO BLANKS I When com- Pletely filled with 100 receipts, return this booklet to us with the Seal unbroken. This booklet will then have a cash redemption value of 15¢. We wm then break the Seal on page 2 that you may see what is printed under It and, If You wish, you may exchange the cash redemption value for whatever the Opening Seal discloses. NO DRAWINGS-NO JUDGINGB--NO DISAPPOINTMENTS! This booklet accepted subject to above conditions. The prizes or premiums were allotted to the said customers or purchasers in accordance with the above legend or instructions. Under the seal was the following Jegend:

1 lb.

Pomco Vac. Can Coffee 2 cans Pomco Tall Milk The articles of merchandise called for under the said seals varied With the individual card and the cash awards varied from 50 cents to $5. The legend under the seal was effectively concealed until the seal had been opened and the amount which the holder of said card received in merchandise or cash was thus determined wholly by lot or chance, The respondents sold and distributed various sales-promotion cards which involved the use of games of chance, gift enterprises, or lottery schemes when used by dealers to promote the sale of their lnerchandise to the consuming public. Such cards were similar to the one hereinabove described and varied only in detail. Findings 33F.T.C.

Respondents furnished their customers with various display posters and advertisements to be used by retail merchants in dis· tributing and using said cards.

PAR. 3. Sales of assortments of said sales-promotion cards were made "to wholesale dealers, jobbers, and retail dealers. The retail dealers who directly or indirectly purchased respondents' said cards distributed the same to their customers and prospective customers and honored the awards as shown when the seals were broken open in accordance with the plan hereinabove set forth. The responde1•ts thus supplied to, and placed in the hands of, others the means of and instrumentalities for conducting lotteries in the sale of their. merchandise in accordance with the sales plan hereinabove set forth. The use by respondents of said method in designing and arranging their said cards and distributing the same for redistribution to the public is a practice of a sort which is contrary to an established public policy of the Government of 'the United States and in viola· tion of criminal laws .

. . PAR. 4. There are in competition with respondents various manu· f~cturers and distributors of sales-promotion cards, premium cards, · price concession cards, coupons, and trading stamps, which when used by dealers do not involve a lottery scheme, game of chance, or a gift enterprise. Many persons, firms, and corporations who sell and distribute various cards or devices for promoting or increasing the sales of dealers are unwilling to offer for sale or sell cards or devices so designed and arranged as to involve a game of chance, gift enter· prise, or lottery scheme, and such competitors refrain therefrom. The consuming public is induced to deal with or purchase merchandise from dealers using respondents' cards in preference to purchasing merchandise from dealers using the devices of respond· ents' competitors because of the games of chance, gift enterprise, or lottery scheme connected with respondents' said cards. By reason thereof dealers are induced to purchase respondents' said cards in preference to devices of competitors of the respondents. The use by respondents of said method in designing and arranging their said cards and distributing them as aforesaid because of said game of chance has a tendency !lnd capacity to and does unfairly divert trade in commerce between and among the various States of the United States and in the. District of Columbia to respondents from their said competitors who do not use the same or equivalent methods, and as a result thereof injury is being and has been clone by respondents to competition in commerce between and among the various States of the United States and in the District of Columbia. MONARCH PRINTERS AND BINDERS 1079 1071 Conclusion PAn. 5. In the course and conduct of their business as aforesaid, respondents in soliciting the sale of and in selling their merchandise, as above described, caused display cards, letterheads, the aforesaid sales-promotion cards and other printed matter to be distributed through the United States mail and by other means to customers and prospective customers located in States other than the State of Michigan and in the District of Columbia. The aforesaid printed matter -contained thereon the firm name of the respondent Monarch Printers :and Binders. The use of the words "Printers and Binders" in respondents' firm name serves as a representation that respondents are the printers and binders of their aforesaid merchandise and that respondents own and operate or control the plant wherein such mer- ~handise is printed and bound.

PAn. 6. In truth and in fact, respondents do not. own, operate, or control a plant for the printing and binding of sales-promotion ~ards and other merchandise which they sell and distribute, but Instead respondents have fill~d and now fill orders for such articles {)f merchandise with merchandise which is printed and bound in a plant which they neither own, operate, nor control. PAn. 7. There has long been a preference on the part of a substantial portion of the purchasing and consuming public and of dealers for dealing directly with a printer and binder, such preference being due in part to a belief that lower prices, elimination of middlemen's profits, superior products, and other advantages can thereby be obtained. . PAn, 8. The use by the respondents of the words "Printers and Binders" in their firm name, has had and now has the tendency and capacity to mislead and deceive purchasers and prospective purchasers by causing them mistakenly and erroneously to believe that the respondents a~e the printers and binders of such merchandise and {)Wn and operate or control the plant wherein such merchandise is Printed, and bound, and to purchase respondents' articles on account Qf such mistaken and erroneous belief.

CONCLUSION The aforesaid acts and practices of the respondents as herein found are all to the prejudice and injury of the public und of re- ~pondents' competitors and constitute unfair methods of competition ln commerce and unfair and deceptive acts and practices in commerce Within the intent and meaning of the Federal Trade Commission Act. }()80 FEDERAL TRADE COMM:ISSION DECISIONS Order 33F. T 0.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission on the complaint of the Commission, answer of the respondents, testimony, and other evidence before W. W. Sheppard, a trial examiner of the Commission theretofore duly designated by it, in support of the allegations of said complaint and in opposition thereto. report of the trial examiner upon the evidence and brief filed in support of the complaint, and the Commission having made its findings as to the facts and its conclusion that' said respondents have violated the provisions of the Federal Trade Commission Act. It is ordered, That the respondents, Ora R. Yates and Charles W. Miller, individuals trading as Monarch Printers and Binders or under any other trade name, and their respective agents, representatives, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution of sales-promotion cards and other articles of merchandise in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

1. Selling and distributing· sales-promotion cards or any other articles of merchandise so designed that their use by retail merchants constitutes, or may constitute, the operation of a game of chance, gift enterprise, or lottery scheme.

2. Supplying or placing in the hands of others, sales-promotion cards or sales-promotion plans or schemes, or any other articles of merchandise which are used, or which may be used, without alteration or rearrangement, to conduct a lottery, game of chance, or gift enterprise when distributed to the consuming public. 8. Using the words "Printers" or "Binders" or any other words of similar import or meaning in respondents' trade name or representing through any other means or device, or in any manner, that the respondents are printers and binders unless and until the respondents actually own and operate or directly and absolutely control a plant for the printing and binding of sales-promotion cards and other merchandise sold and distributed by them. It is further ordered, That the respondents shall, within 60 days after service upon them of -this order, file with the Commission a report in writing, setting forth in detail the manner and form in which they have complied with this order.

SPANGLER CANDY CO. 1081 Complaint