Kling Bros. & Co., Inc. et al

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IN THE MATTER OF 'LOUIS A. 'VALTON CO., KLING BROS. & CO., INC., LEOPOLD KLING AND SAMUEL KLING ·COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION 01!' SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docl;;et 4528. Complaint, June 30, 1941-Decision, Aug. 14, 194l3 "'-Vhere a corporation, which was the wholly owned selling subsidiary of a second corporate concern; said parent corporation and 2 brothers, who were officers of the 2 and together owned about 38,000 of the 50,000 shares outstanding of the latter; engaged, directly and through 8 other corporations, which, likewise thus controlled, were carried on, essentially, as one enterprise, In the manufactm·e and interstate sale and distribution of suits, topcoats, and overcoats, both llirect to indivillual consumers and to retail dealers- {a) Made use of surh designations and descriptions, on labels attached to samples of materials used in carrying on the business of corporation first referred to, as ·"Blue-Green Alpaca-Mohair Knit llack," ''Camel Hair and Wool Blend," and "Silver Grey Mohair-Camel-Wool Blend" when such UJa terials contained none of the l;mir of the alpaca or of the camel; {b) Made use, as aforesaid, of descriptions and designations "Mohair and ·wool !\:nit Back Overcoating-Green" and "Oxford l\Iohair-·wool Blend Topper" for materials which, respectively, had a cotton knit back and contained no UJohair; · {c) Made use, as aforesaid, of descriptions "Green Shadow Strlpe-12% oz. lure Worsted. Silk decoration" for materials in which the decoration was rayon or some fiber other than silk, the product of the cocoon of the silk- . worm· (d) Falseiy represented a domestic product as Imported through attaching to samples of a material made in this country label realling "Imported Corona ' Brown Wool-Crisp Spun Homespun";

.{e) l\Iude use of term "The House of Wool Fabrics" on letterheads and in advertising, together with such statements as "Every Fabric is Guaranteed All Wool-Qualities you can only find in lines selling at $35.00 and $40.00. This we can prove. • • • A guarantee goes with every garment"; when in fact certain of said garments were not composed entirely of wool, and In some Instances contained substantial percentages of cotton, rayon, or other fibers; and, .

{f) Falled to di~close the fact that substantial percentages of cotton and some rayon were contained in materials sold, through use, as typical, of such terms as "Oxford-1\Iohair Wool Blend Topper," to describe materials of wool, rayon, and cotton fibers, whereby as a result of failure to disclose such content of cotton or rayon (which, when manufactured to simulate silk or wool, is practically Indistinguishable by the purchasing public from the one or the other), a substantial portion of the purchasing public was led to believe that the materials in question were composed entirely of wool; 336 FEIDERAL TRADE COMMISSION DECISIONS Complaint 35 F. T. C. With tendency and capacity to mislead and deceive a substantial portion of tbe purchasing public into the belief that said representations were true, thereby inducing it to purchase a substantial volume of the products in question: Held, That such acts and practices, under the circumstances set forth, wer: all to the prejudice and injury of the public, and constituted unfair an . deceptive acts and practices in c01;nmerce. Before Mr. Edward E. Reardon, trial examiner. Mr. Donovan Divet for the Commission.

D'Ancona, Pflaum, lVyatt, Marw,ick & Riskind, of Chicago, Ill., for respondents.

Complaint 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 Louis A. ·walton Co., a. corporation, Kling Bros. & Co., Inc., a corporation, Leopold Kling and Samuel Kling, individually and as officers of said corporations, her~· inafter referred to as respondents, have violated the' provisions of sa~d act, and it appearing to the Commission that a pr.oceeding by it 10 respect thereof would be in the public interest, hereby issues its coj1l· plaint, stating its charges in that respect as follows: PARAGRAPH 1. Respondent, Kling B1·os. & Co., Inc., is a corporation, organized and doing business under and by virtue of the laws of the State of Illinois with its principal office and place of business located at 333-339 'Vest Van Buren Street, in the city of Chicago, State of Illinois.

Respondent, Louis A. 'Val ton Co., is a corporation, organized, e~istf ing and doing business under and by virtue of the laws of the State o Illinois with its principal office and place of business located at 4~1 South Market Street, in the city of Chicago, State of Illinois. It lS a wholly owned and controlled subsidiary of respondent, Kling Bros· & Co., Inc., and is operated as a department of that company. . Respondent, Leopold Kling, is an individual, and is president of the corporate respondents, Louis A. Walton Co. and Kling Bros. & Co., Inc., respectively. . Respondent, Samuel Kling, is an individual, and is vice president of the corporate respondent Louis A. '\Valton Co. and vice president and treasurer of the corporate respondent, Kling Bros. & Co., Inc., respectively. ..... Respondents, Samuel Kling and Leopold Kling, individually, and fls officers of respondent corporations, manage, control, and dominate the affairs and activities of said corporations with respect to the acts a~d practices herein set forth. Said individual respondents have thelr offices and place of business at 333:-339 West Van Buren Street, in the city of Chicago, State of Illinois.

LOUIS A. WALTON CO. ET AL. 337 Complaint Pan. 2. Respondents are now, and for more than 5 years last past, ~ave been engaged in the sale and distribution of men's suits and cloth- Ing tnade to individual measurements. Respondents cause said products when sold to be transported from their places of business in the ~tat~ of Illinois, to purchasers thereof at their respective points of · ocabon in various States of the United States other than the State of Illinois, and in the District of Columbia. Uespondents maintain and at all times mentioned herein, have maintained a substantial course ·~£trade in said products, in commerce, among and between the various · tntes of the United States and in the District of Columbia. PAn. 3. In the course and conduct of their businesses in connection 'V'ith the offering for sale, sale, and distribution of their products; in -commerce, and for the purpo-se of inducing the purchase thereof by the Jl.ublic, respondents have caused various false, misleading, and deceptive statements and representations, descriptive of their businesses .~nd the place of origin and the constituent fibers of their materials, to e printed on labels attached to samples of materials, and inserted in sales magazines, price lists, advertising placards and on letterheads "V'which they have distributed among sales agents, customers and pros- Pective customers located in the various States of the United States and in the District of Columbia.

. PAn. 4. Among and typical of such false and misleading descriptions and designations used on labels attached to samples of respondents' materials are the following :

t ."Blue-Green Alpaca-Mohair Knit Dack" for material which c~m­ Ulns none of the hair of the alpaca.

"Camel Hair and 'Vool Dlend." "Silver Gray Mohair-Camel 'Vool lllend" for materials which contain none of the hair of the camel.· ''Mohair and Wool Knit Back Overcoating-Green" :for materials "-'h"lch have a knit back made of cotton.

''Oxford Mohair-Wool Blend Topper" for materials which contain llo tnohair.

"Green Shadow Stripe * * * pure worsted-silk decoration" for ~aterials in which the decoration is rayon or some fiber other than 'Sllk:, the product of the cocoon of the silkworm. :PAn. 5. Respondents have likewise misrepresented the place of origin ()f their fabrics by misrepresenting domestic products to be imported. ~J:nong and· typical of such misrepresentations used on labels attached 0 samples of respondents' materials is the following: tl ''IliPORTED Corona Drown 'Vool Crisp Spun Homespun" for :fabrics ba~ are not imported, but to the contrary are manufactured in the 11lted States.

338 FE[)ERAL TRADE COMMISSION DECISIONS Complaint 35F. T.c ..

. PAR. 6. Respondents have made further false and misleading state· ments with respect to their businesses and the kind and type of fabri~s; which they sell; the letterheads and advertising mentioned herelll contain the following wording:

The House of Wool Fabrics.

Every Fabric Is Guaranteed All Wool-Qualities You Can Only Find in Lines' Selling at $35.00 and $!0.00. This We Can Prove.• • • A Guarantee Goes With Every Garment.

In truth and in fact the fabrics used by respondents in manufacturing: men's suits and clothing are not composed entirely of wool but in many instances contain substantial percentages of cotton, rayon and other· fibers. . PAn. 7. Respondents further misrepresent the materials of which some of their men's suits and clothing are manufactured in that they' fail to disclose that substantial percentages of cotton and rayon are found therein. Among and typical of such misrepresentations used, on labels attached to samples of respondent's material is the fol·· lowing: . "Oxford 1\fohair-,Vool Blend Topper" for material composed of wool, rayon and cotton fibers. . Substantial quantities of cotton and rayon fibers may be combined with wool in such a manner that the cotton and rayon content is prac·: tically indistinguishable by the purchasing public from the wool and when cotton or rayon• and wool fibers are so combined, and • no(1' disclosure is made as to the cotton or rayon content, the purchaslfito public is thereby led to believe that said materials are composed en· tirely of wool.

Rayon is a chemically manufactured fiber or fabric which may be_so manufactured as to simulate silk or wool. 'Vhen manufacturedto simulate silk, it has the appearance and feel of silk, and when man· ufactured to simulate wool, it has the appearance and feel of wool .. Dy reason of these qualities, rayon, when manufactured to simulate silk or wool and not designated as rayon, is practically indistinguish· able by the purchasing public from silk or wool-as the case may be· Products made of rayon which simulate silk or wool in appearance· are accepted by the purchasing public as silk or wool where no· disclosure is made that the products are actually made of rayon. The word silk has had for many years ~tnd still has in the minds· of the purchasing public, a definite and specific meaning, to wit, the product of the cocoon of the silkworm.

PAR. 8. The false and misleading statements and representatio~s: set forth herein, used by the respondents in connection with their LOUIS A. WALTON CO. ET AL. 339· Findings b.usinesses as aforesaid, are not all-inclusive but are merely illustrative of the character and type of such false and misleading statements· and representations made by respondents to induce the purchase of their merchandise .

. :P.AR. 9. The use by the respondents of the aforesaid acts and prac-· hces has had and now has, the tendency and capacity to mislead and deceive a substantial portion of the purchasing public into the erroneous and mistaken belief that all of said representations are trueand on account of this erroneous and mistaken belief so induced by respondents, the purchasing and consuming public has purchased a. substantial volume of respondents' products. PAR. 10. The aforesaid acts and practices of respondents as herein alleged are all to the prejudice and injury of the public and constitute· llnfair and deceptive acts and practices in commerce within the intent. and meaning of the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE FACTS, ANp ORDER Pursuant to the provisions of the Federal Trade Commission Act,. the Federal Trade Commission on June 30, 1941, issued and subse- £Uently served its complaint in this proceeding upon respondents,. 0Uis A. 'Yalton Co., a corporation, Kling Bros. & Co., Inc., a for- })oration, and Leopold Kling and Samuel Kling, individually, and as officers of the corporate respondents, charging them with unfair a~~ deceptive acts and practices in commerce in violation of the pro- \'1~ions of said act. After the issuance of said complaint and the fil~ng of answers by certain of respondents, testimony and other eyldence in support of and .in opposition to the allegations of the ~0lllplaint were introduced before Jill examiner of the Commission dheretofore duly designa~ed by it, and said testimony and other evience were duly recorded and filed in the office of the Commission. ~hereafter, the proceeding regularly came on for final hearing before e Commission on the said complaint, answers thereto, testimony and other evidence, report of the trial examiner and exceptions thereto, and briefs in support of and in opposition to the complaint (oral argu.tnent not having been requested); and the ·commission, having duly ~considered the matter and being now full advised in the premisest t~1.ds. that t~tis proceeding is in the. interest o~ the public and makes· · 1S Its findmgs as to the facts and 1ts conclusion drawn therefrom. FINDINGS AS TO Tile FACTS • l'.u~.AGRAPH .1.. Responden~, Louis. A. 'Valton Co., is a .corporation 0 rgall1zed; ex1stmg, and domg busmess under and by virtue of the FEIDERAL TRADE COMl\flSSION DECISIONS 340 Findings 35 F. '1'. c. laws of the State of Illinois, with its principal office and place o£ business at 407 South Market Street, Chicago, Ill. It is a wholly owned and controlled subsidiary of respondent, Kling Brothers & Company, Inc., and is operated as a selling agency of that compa~Y· d Respondent, Kling Bros. & Co., Inc., is a corporation, orgamze ' existing, and doing business under and by virtue of the laws of the State of Illinois, with its principal office and place of business at 833-339 West Van Buren Street, Chicago, Ill. £ Respondent, Leopold Kling, is an individual, and is president 0 each of the corporate respondents. I Respondent, Samuel Kling, is an individual, and is vice president 0 respondent, Louis A. Walton Co., and is vice president and treasurer of respondent, Kling Bros. & Co., Inc. 1 PAn. 2. The corporate respondents directly, and the individu:t respondents acting through the corporate respondents and other agencies, are now, and for many years last past have been, engaged in the manufacture, sale, and distribution of suits, topcoats, an <>vercoats, distributing such products both directly to individual con· sumers and indirectly through sales to retail dealers in such products. Kling Bros. & Co., Inc., has two manufacturing subsidiaries, ·wmiaJll Bradford Co., located at Davenport, Iowa, and Ed V. Price & Cod located at respondent's place of business in Chicago, both engage in the manufacture of suits, topcoats, and overcoats. Kling Bros. & Co., Inc., has a number of subsidiaries in addition to respondent Louis A. \Valton Co., including \Vhitney Tailoring Co., Chesterfield Tailoring Co (which is presently inactive), and Leeds Tailors. T~e Ed V. Price Co. also has subsidiaries, including Lamm & Co., A. ~· Anderson Co. (which is presently inactive), and Murphy Bros. Wil· liam Bradford Co. manufactures the garments sold by all the Kling Bros. & Co., Inc., subsidiaries, except Ed V. Price & Co., which does its own manufacturing. The subsidiaries of Kling Bros. & Co., Jnc., other than the Bradford and Price companies are merely sales or· ganizations engaged in the distribution of garments manufactur~d as aforesaid. 'With the exception of the Price company, which has 1tS own sale~ organization, the sales of these subsidiaries are under the direction of the same general sales manager. . The parent company, Kling Bros. & Co., Inc., has outstanding 50,00° shares of capital stock, of which respondent Leopold Kling owns . approximately 21,000, and his brother, respondent, Samuel Kling, owns approximately 17,000 shares. Leopold Kling directs the manu· facturing and selling operations carried on by Kling Bros. & Co., Inc., through its several subsidiaries, and Samuel Kling directs the financial, property, and office affairs of the several companies. To· LOUIS A. WALTON CO. ET AL. 341. Findings feti:er the individual respondents control, dominate, and direct the· Usiness of Kling Bros. & Co., Inc., and its several subsidiary and afliliated corporations, and the Commission concludes that the business. ?f these several corporations is carried on as essentially one enterprise In Which the various corporations are. in substance merely departments. PAR. 3. In the course and conduct of the aforesaid business re- BJ?onuents have caused, and cause, their products, when sold, to be· transported from their places of business to purchasers thereof at ~their respective points of location in various States of the United states other than the State in which the shipments originate and in. th~ District of Columbia, and respondents maint~in, and have maintained, a substantial course of trade in said products in commerce· among and between the various States of the United States and i:n. the District of Columbia.

PAR. 4. In the course and conduct of their aforesaid business, in connection with the offering for sale, sale, and distribution of their- Products in commerce and for the purpose of inducing the purchase thereof by members of the public, the respondents have caused various statements and representations descriptive of their business and of the ~onstituent fibers in their products and the place of origin thereof to e printed on labels attached to samples of such materials, inserted in eales magazines, price lists, advertising placards, and on letterheads "'which they have distributed among sales agents, customers, and J'lrospecttve customers located in various States of the United States llnd in the District of Columbia.

Among the descriptions and designations on labels attached to sam- J?les of materials used in carrying on the business of respondent Louis ~·Walton Co. during the fall season of 1939-40 were the following: 'l3Iue-Green Alpaca-Mohair Knit Back" to designate and describe n :material which contained none of the hair of the alpaca; "Cam.el llair and ·wool Blend" and "Silver Grey Mohair-Camel-Wool Blend" to designate and describe materials which contained none of the hair of the camel; ".Mohair and 1Vool Knit Back Overcoating-Green" to designate and describe materials which had a knit back made of cotton; "Oxford Mohair-·Wool Blend Topper" to designate and describe lllaterials which contained no mohair; and "Green Shadow Stripel3Y? Oz. Pure 'Vorsted. Silk Decoration" for materials in which the dec~ration was rayon or some fiber other than silk, the product of the Cocoon of the silkworm.

PAn, 5. In the conduct of the business of respondent Louis A. 'Valton Co., during approximately the same period of time, respondents falsely represented the place of origin of fabrics offered for sale and Sold. A label reading "IMPORTED Corona Brown Wool-Crisn :342 FEIDERAL TRADE COMMISSION DECISIONS Findings 35F. r.r.c. Spun Homespun" was attached to samples of a particular :material which was not imported from any foreign country but which, on the contrary, was manufactured in this country. Respondents thus falsely represented a domestic product as an imported one. Jl An. 6. Respondents, in c~rrying on the busine~s of Louis A. Walt: Co., also made statements with respect to the busmess of that respon d -cnt and the kind and type of :fabrics sold by it. The letterheads an advertising of said respondent contained the :following: THE HOUSE OF WOOL FATIIUCS and 'Every Fabric Is Guaranteed All Wool-Qualities you can only find in lines seJiln: er,.at $35.00 and $40.00. This we can prove. • • • A guarantee goes with ev .garment.

In truth and in :fact certain of the fabrics offered for sale and sold ~Y the Louis A. 'Walton Co. were not composed entirely of wool, and 111 some instances contained substantial percentages of cotton, rayon, or -other fibers.

PAR. 7. Respondents, in carrying on the business of Louis A. Wa1to~ Co., also failed to disclose the fact that substantial percentages 0 ·cotton and some rayon were contained in materials sold. For exarnR~' the term "Oxford Mohair-'Vool Dlend Topper" was used to descr~ ~ material composed of wool, rayon, and cotton fibers. Substantl~ ·quantities of cotton or rayon fibers may be combined with wool.111 such a manner that the cotton or rayon content is practically indistlll' guishable by the purchasing public :from wool; and when cotton or rayon and wool fibers are so combined and no disclosure made as to the cotton or rayon content, a substantial portion of the purchasing' public is thereby led to believe that said materials are composed en· tirely of wool. · PAR. 8. Rayon used in the production of cloth is a chemically :man~· iactured fiber which may be so processed as to simulate silk or woo I 'When manufactured to simulate silk it has the appearance and feel 0 silk and when manufactured to simulate wool it has the appearance and feel of wool. By reason of these qualities rayon, when manufac· tured to simulate silk or wool and not designated as rayon, is pracj tically indistinguishable by the purchasing public from silk or woo J as the case may be. 'Vhere no disclosure is made of rayon content 0 products which simulate silk or wool in appearance, such products are accepted by a substantial portion of the purchasing public as silk or wool. The word "silk" has had for many years, and still has, in the minds of the purchasing public a definite and specific meaning; namely, the product of the cocoon of the silkworm.

LOUIS A. WALTON CO. ET AL. 343 Order h PAR. 9. The use by respondents of the aforesaid acts and practices as had, and now has, the tendency and capacity to mislead and deceive a ~ubstantial portion of the purchasing public into the erroneous and nnstaken belief that all of said representations are true, and <;Jn account of this erroneous and mistaken belief so induced by respondents the • Purchasing and consuming public has purchased a substantial volume '{)f respondents' products.

CONCLUSION . The aforesaid acts and practices of respondents. are all to the preju- <hce and injury of the public and constitute and deceptive acts and Practices in commerce within the intent and meaning of the Federal Trade Commission Act.

OllDER TO CEASE AND DESIST . This proceeding having been heard by the Federal Trade Commis- Sion upon the complaint of the Commission, tlie answers of certain of respondents, te?timony and other evidence .in support of and in {)Pposition to the allegations of the complaint taken before an examiner Qf the Commission theretofore duly designated by it, report of the trial e)(arniner and exceptions thereto, and briefs filed in support of and in opposition to said complaint, and the Commission having made its findings as to the facts and its conclusion that respondents have violated the provisions of the Federal Trade Commission Act. It is ordered, That respondents, Louis A. 'Valton Co., a corporation, ll.?d Kling Bros. & Co., Inc., a corporation, their officers, representatives, agents, and employees, 'and respondents Leopold Kling and Samuel Kling, individually, and as officers of respondents Louis A. \Valton Co., and Kling Dros. & Co., Inc., their representatives, agents, nnd employees, directly or through any corporate or other device, in ~connection with the offering for sale, sale, or distribution of fabrics or atticles of clothing in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Using the word "Alpaca," or any simulation thereof, either alone ?r in connection or conjunction with any other word or words, to des- Ignate, describe, or refer to any product which is not composed entirely of the hair of the alpaca: Provided, however, That in the case of a Product composed in part of the hair of the alpaca and in part of other fibers or materials, such word may be used as descriptive of the alpaca hair content if there are used in immediate connection or conjunction therewith, in letters of at least equal size and conspicuousness, words truthfully describing such other constituent fibers or materials. 344 FEIDERAL TRADE COMMISSION DECISIONS Order 35 F. T. c.. 2. Using the term ~'Camel Hair," or any other word or words of similar import and meaning, either alone or in connection or conjunc· tion with any other word or words, to designate, describe, or refer to any prod~ct which is not composed entirely of the hair of the carnel:: . Provided, however, That in the case of a product composed in part of the hair of the camel and in part of other fibers or materials, such term may be used as descriptive of the camel hair content if the~e are· used in immediate connection or conjunction therewith, in letters of at least equal size and conspicuousness, words truthfully designating such other constituent fibers or materials. , 3. Using the word "'Vool,". or any simulation thereof, .either al~ne or in connection or conjunction with any other word or words, to desig· nate, describe, or refer to any product which is not composed entire~Y of wool: Provided, however, That in the case of a product composed lD part of wool and in part of other fibers or materials, such word may be used as descriptive of the wool content if there are used in immedi~te· · connection or conjunction therewith, in letters of at least equal size· and conspicuousness, words truthfully describing the constituent fibers· or materials of such product. · 4. Using the word "Mohair," or any simulation thereof, either alone or in connection or conjunction with any other word or words, t~ designate, describe, or refer to any product which is not compose entirely of hair of the Angora goat: Provided, however, That in the case of a product composed in part of the hair of the Angora goat and in part of other fibers or materials, such word may be used as descrip· tive of the angora content if there are used in immediate connectioll' or conjunction therewJ.th, in letters 9£ at least equal size and con·_ spicuousness, words truthfully describing such other constituent fibers: or materials.

5. Using the word "Silk," or any simulation thereof, either al~ne or in connection or conjunction with any other word or words, to destg· nate, describe, or refer to any material which is not composed entirely of silk, the product of the cocoon of the silkworm: Provided, howevefr That in the case of material·composed in part of silk the product of the cocoon of the silkworm, and in part of other fibers or materials, such word may be used as descriptive of the siik content if there are used in immediate connection or conjunction therewith, in letters of at least equal size and conspicuousness, words truthfully describing such other constituent fibers or materials.

6. R~presenting by the use of the word "Imported," or in any manner whatsoever, that fabrics or garments of domestic manufacture are imported from any foreign country.

LOUIS A. WALTON CO. ET AL. 345 Order 7. Using the term "The House of 'Vool Fabrics,".or any other words or terms of similar import or meaning, to designate, describe, or refer to any business which includes the offering for sale and sale of fabrics Which are not composed entirely of wool or garments made from such fabrics. . 8. Advertising, offering for sale, or selling products composed in "-'hole or in part of rayon without clearly disclosing such rayon content; and when such products are composed in part of rayon and in :Part of other fibers or materials, all such fibers or materials, including the rayon, shall be clearly and accurately disclosed. It is fwr,ther ordered, That respondents shall, within 60 days after ~he service upon them of this order, file with the Commission a report ~n Writing setting forth in detail the manner and form in which they . ave complied with this order.

It is further ordered, That no provision of this order to cease and desist shall be construed as relieving respondents in any respect of the ~ecessity of complying with the requirements of the ·'Vool Products labeling Act of 1939 and the rules and regulations promulgated thereunder.

346 FEIDERAL TRADE COMl'viiSSION DECISIONS Complaint 35 F. T. C.