Woolard, Eugene M

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IN THE MATTER OF EUGENE M. WOOLARD, TRADING AS MASTER ARTISTS' ASSOCIATION, INC., ET AL.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. l5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 1514. Complaint, J11nc S, 1941-Decision, Mar. 23, 1913 Where an individual, engaged In the competitive inter:otate sale and distribution of tinted or colored enlat·gt•ments of photographs or snapshots, and frames therefor; and 12 sales agents who canvassed homes In cities, towns, and rural communities, carrying with them sample cases and taking orders on contract forms bearing his tt·adc name- (a) Represented, through said sales agents, that said colored enlargements, de· scribed as "Portraits of Distinction" in contract forms referred to, were "por· trait paintings" or "hand painted";

When In fact they were uot paintings, either water color or oil, but were enlargements· from photographic bases, tinted or colored with pastel or crayon, water color, or other powdered pigments sprayed thereon mainly through the use of an air brush;

(b) Made use of the so-called "draw," under which scheme salesmen assured prospective customer that person drawing the "lucky" certificate was en· titled to take advantage of the "special introductory offer" as thereon set forth, entitling him to a $30 portrait ot· hand-painted portrait at the reduced price of $7.50, or two for $10;

The facts being that $7.50 was the customary pt·lce at which said product was sold; the $10 offer for two was employed by him to increase the volume of his business; no advantage was obtained by the customer through said "draw" since anyone appat·ently acceptable was permitted to secure a "lucky" certificate and purchase said ''paintings'' or "pot·tralts" at the usual price; and the alleged "dt'aW'" was a deceptlve scheme with intent and eliPct of inducing prospects to believe that If thry drew the "lucky'' certificate they would, as one of a favored few, have the fldvantage of obtaining pictures at prices greatly below those which other customers were required to pay therefor;

(o) Made use of trade name "Master Artists' Association" upon his forms and In referring to his aforesaid business ;

Notwithstanding fact his business did not partake of the nature of such an association and he did not operate, or possess equipment or personnel essential to the operation of, an art studio or place where tinted and colored enlargements of photographs were made, but products in question were made for him by other companies at stipulated prices; and (d) 1\lade use of a sales plan under which salesmen concealed from or failed to advise prospective customer that the finished picture-which according to the contract form must be delivered framed but without obligation to accept tbe frame-would be hexagonal In shape with convex surface so that It could only be fitted Into a specially designed frame not ordinarily obtainable; anll undrr whirh salesmen delivering the enlargement ft·named Complaint 36F.T.C.

as aforesaid did not make It n practice-in the event of customer's failure or refusal to buy the frame-to Inform him where one might be obtained from any other source; with result of coinpellhig purchaser to purchase a frame from said Individual and pay the price demanded therefor; With capacity and tendency to mislead and deceive the purchasing publlc concerning the origin, kind, quality, and value of products sold, thereby causing it to purchase said products, and to pay higher prices for them than they would have done otherwise: · IIeld, 'that such acts and practices, under the circumstances set forth, were all to the prejudice and Injury of the public and competitors, and constituted unfair methods of competition in commerce and unfair and deceptive acts and pt·actlccs therein.

Mr. JJ! arsltalllJf organ for the Commission. Complaint Pursuant to the provisions of the Federal Trade Commission Act, and by the authority vested in it by said act, the Federal Trade Commission having reason to believe that Eugene M. 'Voolard, an individual, trading as Master Artists' Association, Inc., and Walter 0. Wyatt, Walter E. Sneed, Bessie Swanscn, L. E. Harrison, William Nadeau, E. R. Malone, G. D. Hill, Caesar Morales, Carl Rhine, D.· Edwards, R. Mcisaac, and Eva Metcalf, individuals, hereinafter designated and 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 public interest, hereby issues its complaint stating its charges in that respect as follows:

PA:RAORArii 1. Respondent, Eugene M. 'Voolard, is an individual, trading as Master Artists' Association, Inc., with his principal office and place of business located at 571G State Street, in the city of East St. Louis, State of Illinois. The residence or business addresses of the remaining individual respondents so far as known to the Commission are as follows: Walter 0. 'Vyatt, Danville, Ill.; Walter E. Sneed, Dahlgren, Ill.; Dessie Swanson, Alexandria, La.; L. E. Harrison, McLeansboro, Ill.; 'Villi am Nadeau, Dexter, Maine; E. R. Malone, McLeansboro, Ill.; G. D. Hill, Gilmer, Tex.; Caesar Morales, San Antonio, Tex.; Carl Rhine, 571G State Street, East St. Louis, Ill.; D. Ed,vards, 5716 State Street, East St. Louis, Ill.; R. Mcisaac, Arnold, Nebr.; and Eva .Metcalf, 571G State Street, East St. Louis, Ill.; these respondents are associated with Eugene M. 'Woolard, trading as Master Artists' Association, Inc., in the operation of said business, lind also have as their business addresses 5716 State Street, East St. Louis, Ill., where mail for them, when received, is forwarded by said Eugene M. 'Voolard.

MASTER ARTISTS' ASSO., INC., ET AL. 367 865 Complaint All of Enid respondents are engaged in the sale and distribution of tinted or colored enlargements of photographs or snapshots and frames therefor. Respondents sell and distribute such products to customers located in various States o£ the United States and cause said products when sold to be transported from the State o£ Illinois or other point of origin to the purchasers thereof located in various other States of the United States and in the District of Columbia. PAR. 2. In the course and conduct of said business, respondents have been and are now engaged in direct and substantial competition with various corporations, partnerships, and individuals likewise engaged in the sale and distribution in commerce between and among the various States of the United States and in the District o£ Columbia of tinted· or colored enlargements of photographs and of frames therefor and likewise with corporations, partnerships, and individuals engaged in the sale of genuine original paintings and water color paintings in commerce between and among the various States of the United States and in the District of Columbia.

PAn. 3. Said respondents, during the period of time for more than 3 years last past, under the control and direction of respondent, Eugene M. 'Woolard, have entered into and. carried out various understandings, agreements, combinations, and conspiracies for the purpose of selling tinted or colored enlargements o£ photographs or snapshots and the frames therefor to the purchasing public by the use of false, misleading, and deceptive representations concerning said products and the nature and character of the business operated by the respondent 'Woolard under the name Master Artists' Association, Inc. PAn. 4. Pursuant to the said understandings, agreements, combinations, and conspiracies, and in furtherance thereof, said respondents, acting in concert and cooperation with each other, have engaged in the following practices, and done and performed, and now do and perform, the following flats and things:

1. In the course and conduct of said business, respondent, Eugene 1\I. 'Voolard, causes the other respondents named herein to visit the homes of various prospective customers in the cities, towns, and rural communities of the various States of the United States offering photographic enlargements and frames therefor for sale. Purchasers of Euch products are led to believe that they are contracting or ~eating with n duly constituted advertising agent or representative of an association of artists organized under the name, and known as, .Master Artists' Association, Inc. Each such respondent is furnished by said respondent, 'Woolard, with nn identification card or card of credentials which is exhibited by him when interviewing various prospective purchasers. Equipment, including sample cases .containing sam- 368 FEDERAL TRADE COl\fMISSION DECISIONS Complaint 36F.T.O.

pies of paintings, is also furnished by said respondent, ·w oolard, to such respondents for use in the solicitation of orders. Respondent, Eugene M. 'Voolard, causes orders or contracts for pictures or paint· ings to be taken on printed forms provided by him bearing the name and address of Master Artists' Association, Inc., aClross the top thereof, and in such order it is variously stated that the customer is entitled to a "Portrait of Distinction" or "Portrait Painting." The said order blank or contract is duly signed by one of the respondents herein as "Advertising Representative" on a line provitled therefor. Receipts similar in tenor and effect are signed "Master Artists' As· sociation, Inc." and mailed to the purchaser when said purchaser's order is received by respondent, 'Voolard. The typical form of con· tract used by the respondents under the trade name l\Iaster Artists' Association, Inc., is as follows:

PORTRAITS OF DISTINCTION .MASTER ARTISTS' ASSOCIATION Incorporated 5716 State St., East St. Louis, lll P.O.---------------~---- Date-------------------- Please make for me -------- Portrait Painting ------------ from the Phvtograph ------------ I have furnished your representative this day, and deliver the same on or about the ---------- day of ------------ 19 ____ , The portrait -------- are to cost me $-------------------- Amount paid your representative $-------------------- Leaving a balance of $--------------------• which I agree to pay on time of delivery.

THIS ORDER IS NOT SUBJEOl' TO ()ANCF:LLAT[ON, VERBAL AGREEMENTS ARE NOT IIECOONIZICD, The above price does not Include Frames or Glass This 4>rder Is given you with the understanding that you ore to deliver the above Portraits In suitable frames, which I am entitled to accept upon the payment of the prices stamped on the back of each frame, It the frames are satisfactory. If I do not accept and pay for the frames I agree to return them forthwith to the one who brings them.

lRecelved by ------------------------------ Advertising Representative Customer MASTER ARTISTS' ASSO., INC., ET AL. 369 Complaint 2. Such respondents, when calling upon prospective purchasers, exhibit several samples of attractively colored and finished specimens of the purported type of work to be performed. The prospective purchaser is told that similar portraits or paintings may be bought at a "Special Advertising Price" or at a "Reduced Price" or for a "Special Producing Price," or for the "Cost of Production." 3. Said respondents particularly call the prospective purchaser's attention to the beauty of the work, the finish, and to the natural color of the hair, eyes, complexion, and clothing. Invariably, the pictures are represented and referred to by said respondents as "paintings," "hand painted portraits," "polychrome portraits," or some term of similar import, and are represented as being worth $30 or some similar amount.

4. Such respondents then inform the prospective purchaser that the completed "painting" furnished by the respondent will be similar to the sample exhibited; that the producer, Master Artists' A!::sociation, Inc., is an art association or association of artists skilled in making portraits, paintings, and similar works of art. The prospective purchaser is then induced to sign an order or contract purporting to entitle the customer to receive a portrait or painting upon payment of the cost of production only.

5. Such respondents then induce the customet· to loan them a photograph or ko~ak snapshot of the party or parties whose portrait is to be "painted," and represent that such photograph is to be used as a model or guide to the artist who is to "paint the portrait" and will be returned to the customer with the completed picture. 6. The delivery of the. finished picture is made at a subsequent date by a respondent other than the respondent soliciting or securing the order or by some other agent of the respondent 'Voolard, who presents the picture fully framed in a peculiar, octagonal, convex shape, and by means of coercion, threats, abuses, and misrepresentations of various kinds endeavors to sell the frame to the customer at varying prices. 7. In the event the purchaser objects to the quality, design, or price of the frame, although previously advised that there is no obligation to buy a frame, the purchaser is, for the first time, informed that Master Artists' Association, Inc., is the only company that furnishes frames of this particular design. As a result of such representations and conduct, the respondents generally succeed in selling the frame at an exorbitant price, usually in the neighborhood of $15 or more. 8. In the event the purchaser refuses to buy a frame, the respondent in many instances refuses to deliver the completed picture, rpgardless of whether or not it has previously been paid for in full, or to return Complaint 3GF.T.C.

the original photograph borrowed from the customer, until a frame is ordered or a claimed balance is paid in full. This is the first time that the purchaser is informed definitely that the photograph which has been furnished to the respondents will not be returned unless the claimed balance is paid in full.

9. Said respondents in some instances further represent that a drawing contest will be held for the purpose of deciding who shall be one of the few "lucky" persons in a given community to have respondents place free paintings in their homes in connection with a "special advertising offer." The respondents, in connection with said drawing, produce a number of sealed envelopes containing various slips of paper. It is represented that most of said slips are blank and of no value, but that a few are trade checks, certificates, or coupons, and entitle the holder thereof to two genuine $30 hand-painted portraits for the sum of $10 or one such painting for $7.50. The said envelopes containing said slips are so manipulated by the respondent making the sale that the prospective purchaser invariably draws a socalled ''lucky" coupon or certificate. The following is typical of the coupons or certificates used:

MASTER ARTISTS' ASSOCIATION CHICAGO For the purpose ot advertising THE MASTER PORTRAIT, exclusive design, and extending our business The Origlnnlliolder ot This RED SEAL CEUTIFICATE Is entitled to receive and take advantage of Our Special Introductory Offer. Acceptable Photographs must be furnished our representative. This certificate Is non-ne:,:otlable and redeemable only as stipulated above. Right Is reserved to withdraw certificate It Photographs are not suitable for Portraits.

Issued tO------------------------------------------------------------------- Master ARTISTS' Association.

The customer is thereupon assured by the respondent that he has been very fortunate in drawing a certificate entitling him to take advantage of respondents' "special introductory offer" and the holder is thereby induced to execute a contract for one or more of such "portraits" through this "special advertising offer at greatly reduced prices." PAn. 5. A crayon is a pencil-shaped piece of colored clay, chalk, or charcoal used for drawing upon paper. A crayon drawing is the act or art of drawing with crayons. A drawing is a representation produced by the art of drawing; a work of art produced by pen, pencil, or crayon. The pastel, in art, is a colored crayon made of pig- I MASTER ARTISTS!' ASSO., IN"C., ET AL. 371 865 Complaint ments ground with chalk and compounded with water into a sort of paste. A drawing made with a colored chalk or crayon is called a pastel, as is also the art of drawing with colored crayons. A painting is a likeness, image, or scene depicted with paints without the aid of photography. A water color is a painting with pigments for which water, and not oil, is used as a solve11t. A portrait, in its ordinarily accepted meaning, is a picture of a person drawn from life, especially a picture or representation of a face; a likeness, particularly in oil. An oil painting is a painting done by hand with brushes in plastic oil colors on canvas, or other material, without the aid of photography.

PAR. 6. In truth and in fact, the various statements and representations made and used by the respondents, and the acts and practices employed by them in concert and cooperation with each other, in the sale and offering for sale of said products in the cities, towns, nnd communities of the various States of the United States, were and are false, deceptive, and misleading in the following, among other, particulars:

(a) Master Artists' Association, Inc., is not and never has been an art association in the sense that such term is known and accepted in the world of art. On the contrary, the business conducted by respond~ ents through the medium of the above styled trade name is and has been no more, in fact, than a business enterprise to sell to the purchasing public for profit, cheap colored or tinted photographic enlargements and frames therefor. The use by respondents of the term, art association, has misled and deceived the purchasing public as to the character of the business actually conducted by the respondents and has caused the public to confuse respondents' business with various organizations similar in name or designation which are conducted or which may be properly designated ns art associations. ('b) The so-called ''paintings," ''hand painted portraits," or "polychrome portraits," as sold by respondents, nre not portraits or paint~ ings in any sense of the word, but to the contrary, nre merely cheap, quickly made photographic enlargements, costing in the neighborhood of $1.25 each, which are tinted or colored by the use of pastel or crayon, water color or other powdered pigments sprayed upon the photographic enlargement in solution largely through the use of a mechanical air brush nnd compressed air. In truth and in fact, said so-called "portraits" or "paintings" are not sold at n "special advertising price" or at n "reduced price" or for a "special producing price" or for the "cost of production," but, to the contrary, the price at which respondents sell the unframed photographic tinted enlargements is in excess of and above the regular and customary price for Complaint 3GF. T. C .

. which said enlargements usually and customarily sell in the ordinary course of business.

(c) The so-called pictures or ''hand painted portraits" sold and distributed by respondents are different from and greatly inferior in quality, workmanship, and appearance to the samples exhibited by respondents when obtaining orders for such so-called pictures or handpainted portraits.

(d) Purchasers do not understand and there is no agreement in connection with said contracts that photographs submitted by them are to be retained by respondents until payment of any sum alleged by respondents to be due them. In truth, purchasers are given the impression that their photographs which have been loaned to the respondents will be returned at the time the finished product is delivered, regardless o! whether or not such product is purchased. (e) Hespondents are not an association of artists and do not employ any artists, nor have they commercialized the talents of any of America's foremost portrait artists. The enlargement and coloring of photographs is done by another company for fixed prices. Master Artists' Association, Inc., is not an association of artists or an association of any kind, but is a trade name used by the respondents in the sale and distribution of said pictures and frames. {f) Respondents conceal and have concealed from purchasers at the time the "portrait" is ordered the fact that the finished product will be delivered in a peculiar convex form, shape, and size; and that it will be impossible for the customer thereafter to obtain a frame to fit said "portrait" except from respondents at prices fixed by respondents.

(g) Respondents' !'selling methods are directf'd primarily to accomplish the sale of a picture frame at an exorbitant price, nnd the respondents' activities and representations in seeming co11tracts for alleged "portraits" nre used to enable respon(lents to contact the purchaser for an opportunity of selling frames of cheap and inferior quality at prices which nre in excess of and. far above the price at which said frames should usually and customarily sell for in tho ordinary course of business.

(h) Respondents' sales of framf's art' accomplishl.'d by col.'rcive and oppressive acts, practices, and reprl.'sentations, among which are retention of the original photograph submitted by the customer or the completed "portrait" or "portraits," or both, until a. frame is purchased by the customer.

( i) The so-called "rf'd seal certificnt£'s'' or "lucky slips'' drawn by customers from respondents upon the reprl.'sentation that the customer is thus obtaining n. ticket or certificate E-ntitling him to obtain MASTER AIR'IISTS' ASSO., INC., ET AL. 373 365 Complaint an expensive hand painting at tt great saving, falsely and deceptively induces the customer to believe that he has thereby obtained a distinct advantage in price and influences him to enter into a contract for a "painting" when, as a matter of fact, such certificate gives no advantage in price and all prospective purchasers are permitted to make the same or similar lucky draw and obtain such red seal certificates.

PAR. 7. Each of said respondents herein has acted, and does act, in concert and cooperation with one or more of the other respondents in doing and performing the acts and things hereinabove alleged in furtherance of said understandings, agreements, combinations, and <:onspiracies. . PAR. 8. The use by the respondents of the aforesaid false and misleading representations, acts, and practices in the sale and offering for sale of purported portraits and paintings has had and now has the tendency and capacity to and does mislead and deceive the purchasing public concerning the quality and value of respondents' products sold as herein described and has thereby induced and is inducing the purchasing public to purchase said products under the erroneous and mistaken belief that the same were and are high-grade quality portraits or paintings and picture frames of exceptional value. The use by respondents of the aforesaid acts and practices has a tendency and capacity to and does unfairly divert trade to respondents from their competitors likewise engaged in the sale and distribution of tinted or colored enlargements or photographs in commerce among and between the. various States of the United States and in the District of Columbia, who truthfully represent their products. A's a consequence thereof, substantial injury has been done and is now being done by respondents to competition in commerce between and among the various States of the United. States and in the District of Columbia. I) AR. 9. Said understandings, agreements, combinations, and conspiracies, and the things done thereunder and pursuant thereto and in furtherance thereof, as hereinabove alleged, have been and now are effectively used by the respondents in making sales of respondents' products to the purchasing public.

PAR. 10. The aforesaid nets and practices of rcsponuents as herein alleged, including said understandings, agreements, combinations, nnd conspiracies, nnd the things done thereunder and pursuant thereto and in furtherance thereof, as hereinabove alleged, arc all to the prejudice and injury of the public and of respondents' competitors, and constitute unfair methods of competition in commerce and unfair and deceptive nets nnd practices in commerce within the intent and meaning of the Fc<lcrnl Trade Commission Act.

Findings 36F.T.C.

Rerort, FINDINGS As To Tile F Acrs, AND Onder Purst:ant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on June 3, 1941, issued its complaint in this proceeding and caused said ~complaint to be served as required by law upon re::;pondents, Eugene M. Woolard, an individual, trading as Muster Artists' Association, Inc., and Walter 0. Wyatt, Walter E. Sneed, llessie Swanson, L. E. Harrison, William Nadeau, E. R. Malone, G. D. Hill, Caesar Morales, Carl Rhine, D. Edwards, R. Mcisaac, and Eva Metcalf, individuals, charging them with the use of unfair methods of competition in commerce and unfair o.nd deep.ptive acts and practices in commerce in violation of the provisions of that act. On June 28, 1941, the above-named respondents, by counsel, filed their answer in this proceeding. Thereafter, respondent Eugene M. \Vool- · ard being desirous of expediting said proceeding and avoiding the expense incident to the taking of testimony, a stipulation was entered into whereby it 'vas stipulated. and. agreed that a statement of facts signed and executed. by the respondent, Eugene M. \Voolard, and Richard P. Whiteley, assistant chief counsel for the Federal Trade Commission, subject to the approval of the Commission, might be taken as the facts in this proceeding and in lieu of testimony in support of the charges stated in the complaint or in opposition thereto, and that the Commission might proceed upon said statement of facts to make its report, stating its findings as to the facts (including inferences which it might draw frt"'m said stipulated facts) and its conclusion based thereon, and enter its order disposing of the proceeding as to said respondent, Eugene M. Woolard, without the presentation of argument or the filing of briefs. Thereafter, this proceeding came on for final hearing before the Commission on said complaint, answer, and stipulation; 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 FACI'S PARAGRAPH 1. The respondent, Eugene M. Woolard (sometimes hereinafter referred to as "respondent"), is an individual, who for more than 3 years prior to July 1, 1941, traded as Master Artists' Association, Inc., with his principal office and place of business located at 5716 State Street, East St. Louis, Ill. Between the dates of July 1936, and May 26, 1938, respondent operated through the medium of MASTER ARTISTS' ASSO., INC., ET AL. 375 365 Findings an Illinois corporation known as Master Artists' Association, from · offices then located at 252 Arcade Building, East St. Louis, Ill. Said corporation was dissolved on or about May 26, 1938. Since that time, until July 1, 1941, said respondent operated under the trade name Master Artists' Association, Inc. During the time stated, respondent was engaged in the business of selling and distributing in commerce tinted or colored enlargements of photographs or snapshots and frames therefor from the above-named addresses. Respondent sold and distributed such products to customers located in various States of the United States other than the State of Illinois and caused said products, when sold by him, to be transported from the State of Illinois or other points of origin to the purchasers thereof located in various other States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of his business, respondent was engaged in direct and substantial competition with various corporations, partnerships, and individuals also engaged in the sale and distribution, in commerce between and among the various States of the United States and in the District of Columbia, of tinted or colored enlargements of photographs or snapshots and of frames therefor. PAR. 3. In the course and conduct of the aforesaid business, individual respondents, Walter 0. Wyatt, Walter E. Sneed, Bessie Swanson, L. E. Harrison, William Nadeau, E. R. Malone, G. D. Hill, Caesar Morales, Carl Rhine, D. Edwards, R. Mcisaac, and Eva Metcalf, acting as sales agents or sales representatives of respondent, Eugene if. 'Voolard, operating as Master Artists' Association, Inc., visited the homes of various prospective customers in the cities, towns, and rural communities of the United States and there offered for sale respondent, Woolard's, colored enlargements of photographs and snapshots and frames therefor. Said individual respondents, in offering said products for sale, represented themselves as sales agents or sales representatives of Master Artists' Association, and were so accepted and dealt with by customers purchasing respondent ·woolard's said colored photographic enlargements and frames therefor. Each said sales agent carried with him for use in the solicitation of orders a sample case obtained from· respondent Woolard which contained attractive samples of colored enlargements sold and distributed by and on behalf of said respondent Woolard.

Orders for colored photographic enlargements were taken on forms employed by respondent, Woolard's, salesmen. A typical form of con· 376 FEDERAL TRADE CQ;\L\IISSION DECISIONS Findings 36 F. T. C.

tract used by respondent, "Woolard, ope.>rating under the trade name of :Master Artists' Association, is as follows: PORTRAITS OF DISTINCTION MASTER ARTISTS' ASSOCIATION P. 0·---------------------------------· Incorporated 5716 State St. ])ate---------------------------------- Enst St. Louis, Ill.

Please make for me -------- Portrait Painting ____________ from the l'hoto· graph ______________ I have furnished your rPpresentntlve this llay, and 1leli\·pr the same on or about the ---------- day of ------------ 19 ____ , The por· trait_ _______ are to cost $------------------- Amount paid your rPpn·~enta· tive $------------------ Leaving a balance of $------------------• whleh I .agree to pay on time of delivery.

THIS ORDER IS NOT SUBJECT TO CANCELLATION.

\'ERBAL AGREEMENTS ARE NOT RECOGNJZt:D.

The above price does not include Fmmes or Glass This order Is given you with the understanding that you are to deliver the above Portraits in suitable frames, which I am entitled to acct>pt upon the payment of the prices stamped on the back of Pach frnme, If the frames arc satisfactory. It I do not nc£>ept and pay for the frames I agree to l'Cturn them forthwith to the one who brings th£>m.

llecelvcd bY------------------------------ Advertising Reprt>sentatlve Customer Sales agents or sales representatives, in offering for sale and selling respondent's colored f'nlargeml'nts, described them usually as "Portrait Paintings" or "Hand Painted."

The Commission finds that a painting is a likeness, image or scene depicted with paints without the aid of photography. A water color is a painting with pigments for which water, and not oil, is used ns a solvent. An oil painting is a painting done by hand with brushes in plastic oil colors on canvas or other material without the aid of photography.

The Commission further finds that the colored enlargem£>nts described and designated by respondent's said sales agents or salt'S representatives as "Portrait Paintings" or "Hand Painted" wf're not in fact paintings or hand-painted products but, on the contrary, were enlargements made from photographic Lases tinted or colored by the use of pastel or crayon, water color, or other powtlt>retl pigments MASTER ARTISTS' ASSO., INC., ET AL. 377 3G5 Findings sprayed upon said enlargements, mainly through the use of a mechanical device known as an air brush operated by compressed air. PAR. 4. Sales representatives of respondent from time to time effected the sale of respondent's said colored enlargements through the use of the so-called "draw." In connection with the use of the "draw," salesmen were equipped with a number of small envelopes, some of 'which contained blarrk pieces of paper and others of which contained so-called "lucky" blue certificates with a red seal in the center. Said certificate stated on its face that the holder of the certificate, for th~ purpose of advertising respondent's products, was entitled to receive and to take advantage of respondent's ''Special Introductory Offer." In connection with the use of the "draw," the prospective customer was from time to time assured by the sales representative of respondent vVoolard that the person drawing a "lucky" certificate would be entitled to receive a $30 portrait or a handpainted portrait at the reduced price of $7.50, or two paintings for $10, such prices being represented as a "Special Introductory Offer" or a "Special Advertising Offer." Prospective customers were in this way led by salesmen to believe that one drawing a "lucky" certificate would obtain a distinct financial advantage and would be enabled to obtain a painting at a great saving in price. The Commission finds that said price of $30 was not in fact the actual or customary price at which respondent's said colored enlargements had been sold, and that the price of $7.50 per picture was not a reduced price nor a "Special Introductory" nor a "Special Advertising" price or offer, but was in fact the customary price at which said product was normally sold by respondent in the usual course of business, and that the price of two colored enlargements for $10 was employed by respondent for the purpose of increasing the general \To]ume of his picture business.

The Commission finds that said ull~ged "draw'' was a deceptive scheme conceived for the purpose and with the result of inducing prospective purchasers to believe that if they "drew" "lucky'' certificates they would have the advantage of obtaining pictures at prices greatly below prices other customers must and did pay for them. Dy means of this "drawing" sch~me or sales plan, members of the purchasing public would be beguiled into believing that they were the exceptional few whom fortune had favored. The use by re!"pondent of the statements and representations of his said sales agents and sales representatives, in connection with the said "draw," had the capacity and tendency to lend the holders of said blue certificates or so-cnlled "lucky" certificates to believe that said certificates placed ~~R71~--43--vol.36----27 Findings 36F. T. C.

the holder thereof at a direct financial advantage in purchasing a "painting" or "portrait," and to induce such holders to enter into con· tracts for the purchase of so-called "paintings" or "portraits." In truth and in fact, said certificate gave the holder thereof no advantage whatsoever in price or otherwise, for any apparently acceptable cus· tomer was permitted to secure a "lucky" certificate and to purchase said "paintings" or "portraits," but was charged the usual and cus· tomary price therefor.

PAR. 5. The Commission finds that respondent'~ business as conducted by him at East St. Louis, Ill., did not consist or partake of the nature of any "association of artists." Nor did respondent operate at East St. Louis, Ill., or elsewhere, or possess the equipment or personnel essential to the operation of, any art studio or institute of art, nor any place of business where tinted or colored enlargements of photographs or snapshots were made. In fact, respondent's said colored enlargements were made for him by another company or other companies at prices stipulated for such service. The Commission finds that the use of such term or trade name, "Master Artists' Association," by respondent and his sales representatives or sales agents and the sales representations made in connection therewith, as hen•in described, had the capacity and tendency to lead purchasers and prospective purchasers to believe that they were contracting or deaHng with duly constituted sales representatives or sales agents of an actually existing art studio, association, or institute, and to cause purchasers and prospective purchasers to confuse the business of respondent with that of various art associations or with organizations similar in name and designation which were actually conducting operations essential to the production of tinted or colored enlargements of photographs and snapshots.

PAR. 6. The said colored enlargements of photographs and snapf'hots sold by respond('nt were hexagonal in shape, 10 by 15 inches in E.ize, with raist>d or convex surface. Frames subsequently sold by re- !'pondent when pictures were delivered were of the same shape and contour, and equipped also with raised or convex glass. Respondent's sales representatives made it a practice to sell the picture first without mentioning the matter of a frame at that time. 1Vhile respondent's salesmen from time to time informal prospective customers that tlh•y did not have to buy a frame if tlH'Y did not desire to do so, and while frames sold by respond('nt might have been obtainable from persons, firms, or corporations engaged in business of the same character as that of respondent 1Voolard, such frames are not and were not ordinarily obtainable in photographic supply stores or furniture stor('S accessible to thp comuming public. Pirtun>s sold by respond('nt MASTER ARTISTS' ASSO., INC., ET AL. 379 865 Order Woolard were customarily delivered to the customer framed in the type or types of frames sold by respondent, i. e., hexagonal in shape and equipped with a raised or convex glass. In the event of the failure or refusal of a customer to buy a frame, respondent's salesmen did not make it a practice to inform the customer where a frame might be obtained from any source other than from respondent. The Commission finds that the sales plan employed by respondent snd his sales agents and sales representatives, to wit, by the sale of a picture by the salesman first contacting the customer and the subsequent sale or attempted sale of a frame by a second salesman calling later, and the making of the picture in a form difficult to fit with a frame, was operated primarily and actually for the purpose of forcing, and had the capacity and tendency to force, customers to buy a frame; that as a result, the puchaser of a picture was compelled to deal with respondent in connection with the purchase of a frame, and to pay the price therefor demanded by respondent.

PAR. 7. The Commission finds that the aforesaid statements, repre- Fientations, acts, practices, and methods used by respondent and his said agents or sales representatives in connection with the conduct of respondent's business, as aforesaid, are not all-inclusive but are illustrative of the character and type of statements, representations, acts, practices, and methods used by respondent and his said sales agents or sales representatives to induce the purchase of the products sold by them.

PAR. 8. The CQmmission finds that the use by respondent, Eugene 1\1, 'Woolard, and his said agents or sales representatives of the hereinabove enumerated acts, P\'actice>s, and methods in connection with the offering for sale and sale of said products in commerce, as aforesaid, has had the capacity and tendency to mislead and deceive the purchasing public co.ncerning the origin, kind, quality, and value of the products sold, and to cause the public to purchase substantial quantitiE-s of respondent, ".,.oolard's said products, and to pay higher pric(•S for such products than they would have done otherwise. C(lNCLVSIO~ The nforesaitl acts and practices of respondent, Eugene M. 'Voolard, and his said sales agents or sales representatives, as herein described, are all to the prejudice and injury of the public and of i·espondent's competitors, and con!-ititute unfair methods of competition in commerce and unfair and decepti\"e acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act.

380 FEDERAL TRADE COMl\USSION DECISIONS Order 36F. 'l'. C.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Conunission upon the complaint of the Commission, the answer of the respondents, and a stipulation as to the facts entered into between the respondent, Eugene 1\f. Woolard, an individual, trading as Master Artists' Association, Inc., and Richard P. \Vhiteley, assistant chief counsel for the Commission, which provides, among other things, that without further evidence or other intervening procedure the Commission may issue an,d serve upon respondent, Eugene M. \Vool- -ard, findings as to the facts and conclusion based thereon, and an <>rder disposing of the proceeding as to said respondent; and the Commission having made its findings as to the facts and conclusion that said respondent has violated the provisions of the Federal Trade Commission Act.

It i8 ordel·ed, That respondent, Eugene 1\f. \Voolard, individually, and trading as Master Artists' Association, Inc., or trading under any other name, and his representatives, agents, and employees, directly or through any corporate or other device, in connectio,n with the offering for sale, sale, and distribution in comm<'rce, ns "commerce" is defined in the Federal Trade Commission Act, of photographic enlargements or any picturf'S made from a photographic base, and of frames therefor, do forthwith cease and desist from: 1. Using the terms "painting," "hand-painted," "oil painting," or "painted portrait," or any other term of similar import, to designate, describe, or refer to respondent's products; or otherwise representing, directly or by implication, th~t respond.ent's products are paintings.

2. Representing that the prices at which respondent offers for sale or sells his products constitute a discount to the pt~rchaser, or that such prices are special or reduced or introductory prices, when such prices are in fact the usual and customary prices at which r('sponucnt sells his products in the normal and usual course of business. 3. Uepresenting as the customary or regular prices or values of respondent's products, prices and values which are in excess of the prices at which such products are r£>gulurly and customarily sold by respondent in the normal and usual course of busin£>ss. 4. Using the term "Artists' Association," or nny other term of similar import, to designate, describe, or refer to respondent's business; or otherwise representing, directly or by implication, that re- ~pondent's business is conducted by· an association of artists. MASTER ARTISTS' ASSO.; INC., ET AL. 381 365 Order · 5. Representing, directly or by implication, that respondent owns, operates, or controls an organization or establishment possessing the equipment and employing the personnel essential to the production of tinted or colored photographs or enlargements. 6. The use of the so-called "draw" or the use of so-called "lucky" certificates or coupons, or the use of any other device, plan, or scheme when•by the n•presentation is made, directly or by implication, that a prospective purchaser may obtain a picture or photograph free or for an amount less than that paid by purchasers. generally. 7. Concealing from or failing to disclose to prospective purchasers that the finished picture or photograph, when delivered, will be so E>haped and designed that it can only be fitted into a specially designed frame not ordinarily obtainable in photographic supply, furniture, or other stores accessible to the consuming public. It is f.u1·ther ordel'ed, That respondent shall, within 60 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 this order.

It is furtller m·de·red, Tllat this proceeding be, and it hereby is, closed as to respondents, Walter 0. ·wyatt, ·walter E. Sneed, Dcssie Swanson, L. E. Harrison, ·william Nadeau, E. R. Malone, G. D. Hill, Caesar Morales, Carl Rhine, D. Edwards, R. Mcisaac, and Eva Met· calf, without prejudice to the right of the Commission, should the facts so warrant, to reopen the same and resume trial thereof in ac· cordance with its regular procedure.

382 FEDERAL TRADE CO.MMISSION DECISIONS Syllabus 36F.T.C.