Blank & Stoller Corporation

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IN THE :MATTER OF nLANK & STOLLER CORPORATION, HARRY H. LONG, GEORGE STOLLER, MAURICE SCHULTZ, AND RAN- DOLPH FAJEN <!COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF Als ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 4523. Complaint, June 24, 19.91-Decision, June 16, 1942 Where a corporation previously engaged In making and selling pltotogr!lpbs, In the course o:e which It acquired a large number of negatives, together with the three officers In control of its business activities and a fourth individual, engaged in making and selling photographic miniatures from said negatives; by means of circular letters to prospective purchasers, whose names and addresses they obtained from the corporate files along with rorresponding negatives-- Represented that the miniatures they offered from negatives of photographs of the prospect had been displayed at public exhibition, were regularly or frequently sold for as much as $75 or $50, and that the quoted price of $12.50 was greatly reduced and a special offer; and that such miniatures were prepared by a new and unusual method ; The facts being that while their place of business had a show case containing a number of miniatures-many of wltlch had been rejected-which could be seen by persons entering, none of the miniatures had in fact been displayed in any public exhibition within the real meaning of the term; none of them had ever sold for any such amounts; quoted price was neither special nor reduced but the regular and customary one which they sought and which they even made no serious effort to maintain, selling at the best price obtainable and sometimes for as low as $5; and methods used were not new or unusual, but commonly known and employed in the trade generally; With tendency and capacity to mislead and deceive a substantial portion of the purchasing public with respect to said products, causing thereby Its purchase thereof :

Ileld, That such acts and practice~. under the c!t·cumstances set forth, were all to the prejudice of t11e public, and constituted unfair and deceptive acts and practices ln commerce.

Before Mr. John lV. Addison, trial examiner. Mr. Donovan Divet for the Commission.

Mr. Joseph J{. G.uerin, Receiver, and Mr. Ernil lVeitzner, o£ New York City, for Blank and Stoller Corp.

Mr. lsidor Glasgal, of New York City, for George Stoller and Maurice Schultz.

Baer & Marks, of New York City, for Uandolph Fnjen. Complaint 3-11!'. '1'. c. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Actt and by the authority vested in it by said act, the Federal Trade Commission, having reason to believe that Blank & Stoller Corporation, a corporation, and Harry J. Long, George Stoller, Maurice Schultz, and Randolph Fajen, individually, and doing business as Blank & Stoller Studios, hereinafter- designated and referred 'to as respond· ents, 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 public interest, hereby issues its complaint, stating its charges in that respect as follows:

PAltAGRAPH 1. The respondent, Blank & Stoller Corporation, is a corporation, organized and existing under and by virtue of the laws of the State of New York and having its office and principal place of business at 227 East Forty-fifth Street, New York~ N.Y. The respondents Harry J. Long, George Stoller~ and Maurice Schultz are, and at all times hereinafter mentioned, have been, officers of said Dlank & Stoller Corporation in charge and control of its business and activities. The said respondents, Harry J. Long, George Sfoller, and Maurice Schultz, and the respondent, Randolph Fajen, are individualst and have at all times hereinafter mentioned done business at Dlank & Stoller Studios with their office and principal place of business at 227 East Forty-fifth Street, New York, N.Y., said office and principal place of business being the same as that oi respondent, Blank & Stoller Corporation.

PAR. 2. The respondents are now and for more than 1 year last past have been engaged in the production, sale'., and distribution of photographic miniatures, sometimes known as gold-tone miniatures. The respondents sell, and at all times mentioned herein have sold, said product to members of the purchasing public situated in the various States of the United States and in the District of Columbia, causing said product when sold to be transported from their said place of business in the State of New York, or other point of origin of shipment, to purchasers thereof at their respective points of location in various other States of the United States and in the District of Columbia. Respondents maintain, and at all times mentioned herein have maintained, a course of trade in their said product in commerce among and between the various States of the United States and in the District of Columbia.

PAR. 3. The respondents for more than 1 year Jast past have entered into and carried out various understandings, agreements, combina- BLAN'K & STOLLE'R CORP., ET AL. 1405 1403 Compluint tions, and conspiracies for the purpose of selling said photographic 1niniatures to the purchnsing public, and of obtaining photographs and negatives from which to produce said miniatures, by the use of false, misleading, and deceptive representations concerning said product, and concerning the purpose for which certain photographs and negatives were obtained as hereinafter alleged. I> AR. 4. Pursuant to said understandings, agreements, combinations, and conspiracies, and in furtherance thereof the respondents for more than 1 year last past, acting in concert and cooperation with each other, for the purpose of promoting the sale- of said product, and for the purpose of obtaining certain photographs from which to produce-some of said miniatures, have engaged in the practice of making false representations as to the merits of their said miniatures, and as to the purposes for which certain photographs and negatives were desired as hereinafter alleged. Said false representations are and have been made by means of letters and other printed and written matter distributed among customers and prospective customers, and by oral statements made to customers and prospective customers. PAR. 5. Among the false and misleading representations so made -and distrib1ited concerning respondents' said. product, and in furtherance of said understandings, agreements, combinations, and conspiracies are the following:

Recently we niade a goldtoue miniature from one of your negatives for display nt an exhibition of miniatures, as we considered It admirably adapted for the purpose.

The Exhibition lias been concluded and we m·e taking this occasion to offer you the opportunity of acquit·ing for yourself this .fine ~eproduction at the greatly reduced price of $12.50. Our regular price Is $75.00. Recently we took occasion to offer you a very fine miniature of yourself which we have on hand. Our special offer to you of $12.50 for the miniature was a fraction of om· re~ular price for this type of work. The miniatures ure selling for as high as $50.00, according to the type of workmanship. However, due to our new method of pre11aratlon, we are able to furnish II goldtone miniature for you, that will be as fine in evet·y respect as the miniatures ~'selling for higher prices.

By the use of said representations and others of similar import and hleaning not herein specifically set forth, the respondents have represented and do represent that said miniatures so offered for sale have been displayed at a legitimate exhibition of the ki11d ordinarily r·onducted by photographers to "·which the public was invited and which Were largely attended; that the sum of $12.50 is a greatly reduced price for said miniatures, and constitutes a special offer; that the regular price at which respondents sell said miniatures is in some instances Complaint 34lr. T.C. $75, and in other instances $50; and that said miniatures are prepared by a ~ew and novel method heretofore unknown to persons engaged in the production of similar miniatures.

P .AR. 6. The aforesaid representations are false and misleading. In truth and in fact said miniatures are not and have not been displayed at a legitimate exhibition of the kind ordinarily conducted by pho.tographers to which the public was invited and which were largely attended, or at any other exhibition; the sum of $12.50 is not a reduced price for said miniatures, but is the price at which they are usually offered for sale by said respondents, and does not constitute a special offer; the regular price at which said miniatures are sold is. not $50 or $75 or any· sum approaching either of these amounts; said miniatures are not prepared by a new or novel method heretofore unknown to persons engaged in the business of producing miniatures. P .AR. 7. Many of the miniatures sold by respondents, as heretofore alleged, have been made from photographs or negatives supplied by the respondent., Blank & Stoller Corporation. In order to obtain additional and other photographs and negatives from which to produce miniatures, respondents in the course and conduct of their said business and in furtherance of said understandings, agreements, com-. binations, and conspiracies have falsely represented to numerous members of the purchasing public located in the various States of the United States and in the District of Columbia that they were connected with one or more newspapers or press associations, and were desirous of taking photographs of said members of the purchasing public for use by said newspapers or press associations at some future date. In truth and in fact none of said respondents is, or at any time herein mentioned has been, in any way connected with any newspaper or press association, and said photographs and negatives were in fact wanted only for the purposes of· preparing miniatures to be offered for sale to the various persons to whom said representations were made. PAR. 8. The use by the respondents of the aforesaid acts, practice~ 1 and methods has the tendency and capacity to, and does, mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that such representations are true, and into the purchase of substantial quantities of respondents' said product. PAR. 9. The aforesaid methods and practices of the respondents1 including said understandings, agreements, combinations, and conspiracies, and the things done thereunder and pursuant thereto and in furtherance thereof~ as hereinabove alleged, are all to the prejudice and injury of the public and constitute unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

BLANK & STOLLE'R GORP., ET AL. 1407 1403 Findings REI'ORT, FINDINGS AS 'l'O THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on June 24, 1941, issued and subsequently served its complaint in this proceeding upon the respondents, Dlan.k & Stoller Corporation, a corporation, and Harry H. Long (re· fert·ed to in the comp_laint as Harry J. Long), George Stoller, Maurice Schultz, and Randolph Fajen, individually, and doing business as Blank & Stoller Studios, charging them with the use of unfair and deceptive acts and practices in commerce in violation of the provisions of said act. After the filing of answers by the respondents (except respondent, Stoller, who filed no answer), testimony and other evi· dence in support of the allegations of the complaint were introduced by attorney for the Commission, and in opposition thereto by the at· torneys for certain of the respondents, before John '\V. Addison, a trial examiner of 'the Commission theretofore duly designated by itt ~nd such testimony and other evidence were duly recorded and filed In the office of the Commission. Thereafter, the proceeding regularly came on for final hearing before the Commission on the complaintt the answers of the respondents, testimony, and other evidence, report of the trial· examiner upon the evidence and the exceptions to such report, and briefs in support of and in opposition to the complaint .(oral argument not having been requested), and the Commission hav· Ing duly considered the matter and being now fully advised in the Premisese, 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, Blank & Stoller Corporation, is a cor· Poration, organized and existing under and by virtue of the laws of the State of New Jersey, its office and principal place of business having formerly been located at 227 East Fotty-fifth Street, New York, N. Y. While the corporation has not been dissolved, it has been adjudicated a bankrupt and is no longer engaged in business operations .

. Respondents, Harry H. Long, George Stoller, and Maurice Schultzt are officers of the corporate respondent, and at all times referred to herein, were in full charge of its business activities. They formulated the policies and directed and controlled all of the acts and practices ~f the corporation. The present address of respondent, Long, is 33 :Vest Forty-second Street, New York, N. Y., that of respondentt Schultz, is 91 East Fifty-ninth Street, New York, N.Y., and the last Findings 34 F. T. C. known address of respondent, Stoller, is 227 East Forty-fifth Street, New York, N. Y.

The present address of respondent, Fajen, is 45 'Vest Fifty-seventh Street, New York, N. Y.

PAR. 2. During the period of its active business operations re· spondent, Blank & Stoller Corporation, was engaged in the business of making and selling photographs, and in the course of its operations it acquired a large number of photograph negatives. In March 1940, an agreement was entered into among all of the respondents herein under which the respondents engaged in the joint business of making and selling photographic miniatures, sometimes referred to as goldtone miniatures. The miniatures were made from the negatives in the files of the Blank & Stoller Corporation. This business, which was operated under the name of Blank & Stoller Studios, was con· tinued by all of the respondents until about April. 1, 1941. At that time a controversy arose between respondent, Fajen, and the other respondents, and Fajen severed his connection with the business. The other respondents continued to operate the business for son1e 2 months thereafter, when it was discontinued entirely. The cor· poration was adjudicated a bankrupt on August 14, 1941. PAR. 3. In the course and conduct of their business the respondents sold their miniatures to numerous members of the purchasing public situated throughout the United States, and caused the miniatures, when sold, to be transported from respondents' place of business in the State of New York to the purchasers thereof at their respective points of location in various other States of the United States and in the District of Columbia. Responqents maintained a course of trade in their products in commerce among and between the several States of the United States and in the District of Columbia. PAR. 4. In promoting the sale of their miniatures the respondents addressed numerous circular letters to prospective purchasers, the names and addresses. of such persons being obtained from the files of the corporation, along with the corresponding negatives. One form of letter in common use by . the respondents read in part a.s follows:

You will probably recollect that a few years ago we finished some ve1·y fine photographs of you.

Recently we made a goldtone miniature from one of your negatives for. dilplny at an exhibition of miniatures, as we considered It admirably adapted for the purpose.

The exhibition hns been concluded and we nre tnklng this occasion to offer you the opportunity of acqnii·ing for yourself this fine reproduction at tbe greatly reduced price of $12.00. Our regular price Is $75.00. BLAl\'X & STOLLER CORP., ET AL. 1409 1403 Findings If no response was received to this letter, a second letter was usually addressed to the prospect which read in part as follows: Recently we took occasion to offer you a very fine miniature of yourself which· We have on band from our recent exhibition of miniatm·es. Our special offer to you of $12.GO fm· the miniature was a fraction of our regular price for this type of work.

Inasmuch as we have no further exhibitions planned at this time, we believe the miniature would be of far greater ·mine to you, than to us. Accordingly, we a1·e bringing the matter to your attention once more. ·Another letter used by respondents read in part as follows: Have you any of our photographs that we made of you? If not, perhaps you Will recall that we made some hu·ge portraits for you some time ago? l\Iauy of our customers have found that besides a large portrait, they would like to have a miniature. Something compact to have on a desk or dressing table, perhaps a gift to their children or relatives. They wanted something that would look expensive yet would not cost too much. 'Ve experimented with a few miniatures and our best to date is our goldtone miniature. Your negative i.'l very adaptable and would make a bt>autifnl goltltone miniature. These miniatures are sellin;;- for as high as $::!0,000, according to the type ot worlnnanship. However, due to our new method of preparation, we are able to finish a golrttone miniature for you for $12.!30, that will be us fine in every respect us the miniatures selling for higher prices. PAn. 5. Through the use o£ these representations and others of a similar nature, the respondents represented to prospective purchasers that the miniatures offered for sale had been displayed at public exhibitions; that the miniatures regularly or frrquently sold for prices as high as $75 and $50, and that the quoted price of. $12.50 was a greatly reduced price and constituted a special offer; and that tha miniatures were prepared by a new and unusual method theretofore Unknown to persons engaged in the production o£ miniatures. PAR. 6. The evidence sho"·s and the. Commission finds that none. of the miniatures offered for sale by respondents had in fact been ' displayed at any public exhibition. There was in respondents' place of business a showcase containing a number of miniatures, many of which had been rejected by purchasers, and these miniatures could be seen by persons entering respondents' place of busines.s, but ther·~ had Heyer been any exhibition of any o£ the miniatures within the real meaning o£ the term. None of respondents' miniatures had ever sold for $75 or $50, or for any amount ap})l'Oaching such figures. The quoted price of $12.50 was in no sense a special or reduced price and did not constitute a special offer, but was the regular and <-ustomnry price sought by respond('nts for the miniatures. In fact, respondents made no serious effort to maintain even the price of 406::>oom-42-vol. 34--89 Order 34 F. T.C.

$12.50 but sold the miniatures at the best price obtainable, sometimes as low as $5. The method used in the preparation of the miniatures was in no sense new or unusual but was a method commonly known and used in the trade generally.

The Commission therefore finds that the repre-sentations made by the respondents were false, misleading, and deceptive. PAR. 7. The Commission further finds that the use. by the re· , spondents of these false, misleading, and deceptive representations had the tendency and capacity to mislead and deceive a substantial portion of the purchasing public with respect to the qualities, char· acteristics, and value of respondents' products, and the tendency and capacity to cause such portion of the public to purchase r~spondents' products as a result of the erroneous and mistaken beliefs so en· gendered.

CONCLUSION The nets 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 arid 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, the answers of certain of the respondents, testimony, and other evidence taken before John ·w. Addison, a trial examiner of the Commission theretofore duly desig· nated by it, in support of the allegations of the complaint and in op· position thereto, report of the trial examiner upon the evidence and the exceptions to such report, and briefs in support of and in opposi-· tion to the complaint (oral argument not having been requested), and the Commission having made its findings as to the facts and its conclusion that the respondents have violated the provisions of the Federal Trade Commission Act.

It is ordered, That the respondents, Blank & Stoller Corporation, a corporation, its officers, and Harry H. Long, George Stoller, Maurice Schultz, and Randolph Fajen, individually, and doing business as Dlank & Stoller Studios, or doing business under any other name, and respondents' representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale, and distribution of respondents' miniature~ in commerce, as "commerce'' is defined in the Federal Trade Commission Act, do forthwith cease and desist from:

BLANK & STOLLER CORP., ET AL. 1411 1403 Oruer 1.. Representing that respondents' miniatures have been displayed at public exhibitions.

2. Representing that respondents' miniatures have ever sold for $75 or $50, or for any amount in excess of that for which such miniatures have actually been sold by respondents.

3. Representing as the customary or regular price of respondents' miniatures, any price which is in excess of the price at which such miniatures have been customarily or regularly sold by respondents in the usual course of business.

4. Representing that the price at which respondents' miniatures are offered for sale constitutes a special or reduced price, when in fact such price is the usual or customary price at which such miniatures are offered for sale by respondents in the usual course of business. 5. Representing that respondents' miniatures are prepared by a. new or unusual method.

It is fwther 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.

Syllabus 34F. T. C.