Penn Lubric Oil Co.

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

LINSEED OIL & PAINT CO.

COMPLAINT IN THE MATTER OF THE ALLEGED VIOLATION OF SECTION 5 OF AN ACT OF CONGRESS APPROVED SEPTEMBER 26, 1914.

Docket 491.—January 29, 1920.

SYLLABUS.

Where a corporation engaged in the manufacture and sale of oils, greases, and kindred products, and trading as the Midwest Linseed Oil & Paint Co.— (a) advertised a product composed of linseed oil adulterated with a low-grade mineral oil as “Raw commercial linseed oil” and “Boiled commercial linseed oil,” thereby misleading purchasers into the belief that they were being supplied with pure linseed oil; (b) sold and offered for sale linseed oil adulterated and mixed with low-grade mineral oil and other ingredients as “Commercial raw linseed oil, not sold or intended for medicinal purposes,” and “Commercial boiled linseed oil, not sold or intended for medicinal purposes,” without affirmatively indicating that said linseed oil had been adulterated or mixed;

(c) used upon its letterheads and advertising circulars distributed among its customers, pictures showing two buildings, one marked “Factory,” with an overhead sign bearing the name “Midwest Linseed Oil Co.,” the other marked “Dealer,” although during the period in which such letterheads and advertising circulars were

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used, said corporation had no buildings marked as aforesaid and did not own, occupy, or operate any such large factory as represented by said pictures; with the result of deceiving the trade and general public: Held, That such adulteration, false and misleading advertising, and false representations, under the circumstances set forth, constituted unfair methods of competition in violation of section 5 of the act of September 26, 1914.

COMPLAINT.

The Federal Trade Commission, having reason to believe from a preliminary investigation made by it that the Penn Lubric Oil Co., trading as Midwest Linseed Oil & Paint Co., hereinafter referred to as respondent, has been and now is using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and it appearing that a proceeding by it in respect thereof would be to the interest of the public, issues this complaint, stating its charges in this respect on information and belief as follows: PARAGRAPH 1. That the respondent, Penn Lubric Oil Co., is a corporation doing business under the laws of the State of Missouri with its principal office and place of business located at the city of Kansas City, in said State, and is engaged in the business of manufacturing, purchasing, selling, and reselling certain oils, greases, and kindred products under the trade name of Midwest Linseed Oil & Paint Co., in competition with other persons, firms, copartnerships, and corporations similarly engaged. PAR. 2. That in the conduct of its business the respondent purchases the component ingredients used in the manufacture of said oils, greases, and kindred products in various States and Territories of the United States and transports the same through other States and Territories in and to the city of Kansas City, State of Missouri, where they are made and manufactured into the finished product and sold and shipped to purchasers thereof; that after such products are so manufactured they are continuously moved to, from, and

MIDWEST LINSEED OIL & P'T CO. (PENN LUBRIC OIL CO.). 297

295 Complaint.

among other States of the United States, the Territories thereof, and the District of Columbia; and there is continually and has been at all times herein mentioned a constant current of trade and commerce in said products between and among the various States and Territories of the United States, the District of Columbia, and foreign countries, and more particularly from other States and Territories of the United States and the District of Columbia, to and through the city of Kansas City, State of Missouri, and from there to and through other States of the United States, Territories thereof, the District of Columbia, and foreign countries.

PAR. 3. That the respondent, trading under the name Midwest Linseed Oil & Paint Co., for more than a year last past in the sale of certain of its products in interstate commerce has in the conduct of its business labeled and branded certain of its products which are and have been adulterated and mixed with a low grade of mineral oil and other ingredients as "Commercial raw linseed oil" and "Commercial boiled linseed oil, not sold or intended for medicinal purposes"; that such brands and labels are false and misleading and calculated and designed to and do deceive the trade and general public into the belief that such products are manufactured and composed wholly of linseed oil.

PAR. 4. That the respondent, trading under the name Midwest Linseed Oil & Paint Co., for more than a year last past has used and is now using a cut upon their letterheads of extensive buildings, one of which is marked "Factory," with an overhead sign bearing the words "Midwest Linseed Oil Co.." and the other marked "Dealer" with an overhead sign "Hardware and paint," with the intent and purpose of deceiving and misleading the trade and general public into believing that the said cut represents the manufacturing plants as shown to be the plant of respondent, when in fact and truth respondent does not own or operate the plant as represented and indicated by the said cut; that such representations so made by respondent on said letterheads are misleading and calculated and designed to and do deceive the trade and general public.

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REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

The Federal Trade Commission, having reason to believe that the above-named respondent, Penn Lubric Oil Co. (trading as Midwest Linseed Oil Co.), has been and now is using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and that a proceeding by it in that respect would be to the interest of the public, and fully stating its charges in that respect; and the respondent Penn Lubric Oil Co. (trading as Midwest Linseed Oil & Paint Co.), having filed its answer admitting that all the allegations of said complaint and each count and paragraph thereof are true in the manner and form therein set forth, and consenting and agreeing that the Federal Trade Commission shall forthwith proceed to make and enter its report stating its findings as to the facts and its conclusions of law and its order disposing of this proceeding without the introduction of testimony or the presentation of argument: therefore, the Federal Trade Commission now makes and enters this its report stating its findings as to the facts and its conclusions.

FINDINGS AS TO THE FACTS.

PARAGRAPH 1. That the respondent, Penn Lubric Oil Co., is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Missouri, having its principal office and place of business located at Twenty-eighth and Southwest Boulevard, in the city of Kansas City, in said State, and is now and for more than one year last past has been engaged in the business of manufacturing, purchasing, selling, and reselling certain oils, greases, and kindred products in interstate commerce throughout the various States of the United States, the Territories thereof, the District of Columbia, and foreign countries, in direct competition with other persons, firms, copartners, or corporations similarly engaged.

MIDWEST LINSEED OIL & P'T CO. (PENN LUBRIC OIL CO.). 299 295 Findings.

PAR. 2. That for more than one year last past respondent, Penn Lubric Oil Co., has carried on and conducted the linseed oil and paint department of its business under the trade name and style of Midwest Linseed Oil & Paint Co. PAR. 3. That the respondent, trading under the name and style of Midwest Linseed Oil & Paint Co., in the conduct of its linseed-oil business, has never manufactured linseed oil, but purchases pure linseed oil from various dealers in such oils wherever it can buy to the best advantage and transports said oil to its factory, where it is adulterated, mixed, or compounded with a low-grade mineral oil and other ingredients, according to a formula, under high heat temperature and then sold to the public in interstate commerce. PAR. 4. That for more than one year last past respondent, trading under the name and style of Midwest Linseed Oil & Paint Co. in the conduct of its business, as aforesaid, has published and circulated advertising matter in which it has offered for sale to the public a product which it calls "Raw commercial linseed oil," and "Boiled commercial linseed oil," which said linseed oil is not pure linseed oil but is adulterated, mixed, or compounded with a low-grade mineral oil, as aforesaid, and said terms are calculated and designed to and do lead the customers and purchasers of respondent's product to believe that they are being supplied with pure linseed oil. PAR. 5. That for more than one year last past the respondent, trading under the name and style of Midwest Linseed Oil & Paint Co., has in the conduct of its business, as aforesaid, sold and offered for sale linseed oil which has been adulterated and mixed with a low-grade mineral oil and other ingredients under the label or brand "Commercial raw linseed oil, not sold or intended for medicinal purposes," and "Commercial boiled linseed oil, not sold or intended for medicinal purposes," which said label or brand does not notify, inform, or indicate to the purchasers thereof that the linseed oil has been adulterated, mixed, or compounded, as aforesaid. PAR. 6. That for more than one year last past the respondent, trading under the name and style of Midwest Linseed

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Oil & Paint Co., in the conduct of its business, as aforesaid, has used upon its letterheads and advertising circulars which were circulated among its customers a certain cut or picture representing two buildings, one of which is marked "Factory," with an overhead sign bearing the name "Midwest Linseed Oil Co.," and the other marked "Dealer"; that during the time in which respondent used, circulated, and published such letterheads and advertising circulars containing such pictures and representations it had no buildings marked "Factory" bearing the sign "Midwest Linseed Oil Co.," or "Dealer," and did not own, lease, occupy, or operate any such large factory as represented by said cut or picture, and that such representations on its letterheads and advertising circulars were calculated and designed to and did deceive the trade and general public. PAR. 7. That the effect of the acts and practices in the manner and form above mentioned and set forth may be to hinder, harass, and embarrass competitors of the respondent in the conduct of their business.

CONCLUSIONS.

That the methods of competition set forth in the foregoing findings of facts in paragraphs 4, 5, and 6, and each and all of them are under the circumstances therein set forth unfair methods of competition in interstate commerce in violation of an act of Congress approved September 26, 1916, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

ORDER TO CEASE AND DESIST.

The Federal Trade Commission, having issued and served its complaint herein, and the respondent, Penn Lubric Oil Co. (trading as Midwest Linseed Oil & Paint Co.), having filed its answer in which it consented and agreed that the Federal Trade Commission shall proceed forthwith upon the same and make and enter its report stating its findings as to the facts, its conclusion, and its order, without the introduction of testimony, and waiving any and all right to re-

MIDWEST LINSEED OIL & P'T CO. (PENN LUBRIC OIL CO.). 301

295 Order.

quire the introduction of testimony or the presentation of argument in support of the same, and the Federal Trade Commission having made and entered its report stating its findings as to the facts and its conclusions that the respondent has violated section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," which said report is hereby referred to and made a part hereof: Now, therefore, It is ordered, That the respondent, Penn Lubric Oil Co. (trading as Midwest Linseed Oil & Paint Co.), its officers, agents, representatives, servants, and employees, cease and desist from directly or indirectly— (1) Using cuts, prints, pictures, or other representations on its letterheads or in its advertisements or other printed matter circulated and published by it which falsely represent its office or factory or plant or equipment or place of business.

(2) Selling or offering for sale linseed oil which has been adulterated, mixed, or compounded with low-grade mineral oil and other ingredients as "Commercial raw linseed oil, not sold or intended for medicinal purposes," and "Commercial boiled linseed oil, not sold or intended for medicinal purposes," without notifying or informing or indicating to the purchasers thereof that the same is adulterated, compounded, or mixed, as aforesaid. (3) From selling or offering for sale any compound or mixture of linseed oil with cheaper oils, chemicals, or other ingredients as and for pure linseed oil. (4) From publishing, circulating, or causing to be published or circulated throughout the various States of the United States, the Territories thereof, the District of Columbia, or foreign countries advertisements, circular letters, or any other printed matter whatsoever wherein it is stated, set forth, or held out to the trade and general public that the respondent is offering to sell linseed oil when the product so offered or advertised has been adulterated, mixed, or compounded with baser mineral oil, chemicals, or other ingredients unless it is clearly, definitely, and distinctly

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stated or indicated or shown to the purchasers or prospective purchasers thereof the true character of the same. (5) From selling or offering for sale in any manner whatsoever paints, oils, greases, and kindred products which have been adulterated or which contain adulterated ingredients as and for pure products.

It is further ordered, That the respondent, Penn Lubric Co. (trading as Midwest Linseed Oil & Paint Co.), shall within 60 days from the date of this order file with the Commission a report setting forth in detail the manner and form in which it has complied with the order of the Commission herein set forth.

FEDERAL TRADE COMMISSION v.

JACOB LANSKI.

COMPLAINT IN THE MATTER OF THE ALLEGED VIOLATION OF SEC- TION 5 OF AN ACT OF CONGRESS APPROVED SEPTEMBER 26, 1914.

Docket 276.—February 5, 1920.

SYLLABUS.

Where an individual engaged in the business of buying, selling, and shipping iron and steel scrap, in direct competition with a corporation having a similar name, at different times accepted and converted to his own use shipments of iron and steel scrap theretofore purchased by, and consigned to, said corporation, with full knowledge that such corporation was the consignee— Held, That such acts of conversion constituted, under the circumstances set forth, an unfair method of competition in violation of section 5 of the act of September 26, 1914.

COMPLAINT.

The Federal Trade Commission having reason to believe from a preliminary investigation made by it that Jacob Lanski, hereinafter referred to as respondent, has been for more than a year last past using unfair methods of competition in interstate commerce in violation of the provisions of section 5 of the act of Congress approved September 26,

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302 Complaint.

1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," and it appearing that a proceeding by it in respect thereof would be to the interest of the public, issues this complaint, stating its charges in that respect on information and belief, as follows:

PARAGRAPH 1. The respondent is now and for more than one year last past has been engaged at the city of Chicago, in the State of Illinois, in the business of buying, selling, and shipping iron and steel scrap generally in interstate commerce throughout the States and Territories of the United States, and that at all times hereinafter mentioned the respondent has carried on and conducted such business in direct competition with other persons, firms, copartnerships, and corporations similarly engaged.

PAR. 2. The I. Lanski & Son Scrap Iron Co., a corporation, is now and for more than one year last past has been engaged at the city of Chicago, in the State of Illinois, in the business of buying, selling, and shipping iron and steel scrap generally in interstate commerce throughout the States and Territories of the United States in direct competition with the respondent and other persons, firms, copartnerships, and corporations similarly engaged; that immediately prior to the time that respondent engaged in the business hereinbefore described he was a stockholder in and associated with his cousin, I. Lanski, in managing the business of the I. Lanski & Son Scrap Iron Co.

PAR. 3. The respondent and the I. Lanski & Son Scrap Iron Co. in carrying on their business severally purchase iron and steel scrap in carload lots from various dealers located in numerous States of the United States, and cause such iron and steel scrap to be shipped by rail to their respective yards at Chicago, Ill., where it is unloaded, separated, sorted, classified, and sold and shipped in interstate commerce to purchasers thereof located in the various States and Territories of the United States. PAR. 4. That at various times during the year 1918 certain railway companies caused to be diverted and delivered to the respondent at his yards in Chicago, Ill., several car-

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loads of iron and steel scrap that had been theretofore purchased by and shipped and consigned to the I. Lanski & Son Scrap Iron Co. at its yards in Chicago, Ill.; that the respondent, without having any invoices, bills of lading, or other grounds for believing that said shipments were intended for him, accepted, unloaded, and converted to his own use said cars of iron and steel scrap so diverted; that owing to the similarity of names of the respondent and I. Lanski & Son Scrap Iron Co., freight bills and other correspondence relating to said shipments, and intended for the I. Lanski & Son Scrap Iron Co. were at various times, by mistake, delivered through the mails to the respondent, and that the respondent, by means of the information therein contained, learned the names of numerous dealers with whom the I. Lanski & Son Scrap Iron Co. was transacting business, and by correspondence with such persons, and by offering to pay them higher than market value for iron and steel scrap, and by various other practices, attempted to induce such persons to transact their business with him; that the effect of the respondent's acts in accepting and converting to his own use iron and steel scrap shipped and consigned to the I. Lanski & Son Scrap Iron Co., and in obtaining and making use of the names of dealers with whom that company was transacting business, has been to stifle and suppress competition in the purchase, sale, and shipment of iron and steel scrap in interstate commerce throughout the States and Territories of the United States and to cause pecuniary loss, inconveniences, delay, and confusion to the I. Lanski & Son Scrap Iron Co. in conducting its business.

REPORT, FINDINGS AS TO THE FACTS, AND ORDER.

A complaint having been issued by the Federal Trade Commission in the above-entitled proceeding, and the respondent therein named having filed his answer herein, and evidence having been adduced by the respective parties to said proceeding, and the Commission having considered the same, together with the written briefs and arguments of the

JACOB LANSKI. 305 302 Findings.

attorneys for the said parties, and the Commission being now fully advised in the premises, reports and finds as follows:

FINDINGS AS TO THE FACTS.

PARAGRAPH 1. That the respondent, Jacob Lanski, is now and for more than one year last past has been engaged at the city of Chicago, in the State of Illinois, in the business of buying, selling, and shipping iron and steel scrap in commerce throughout the States and Territories of the United States, and has carried on and conducted his business in direct competition with other persons, firms, and corporations similarly engaged.

PAR. 2. That I. Lanski & Son Scrap Iron Co. is an Illinois corporation, and for more than a year last past has been engaged at the city of Chicago, in the State of Illinois, in the business of buying, selling, and shipping iron and steel scrap in commerce throughout the States of the United States in direct competition with Jacob Lanski and other persons, firms, and corporations similarly engaged. PAR. 3. That Jacob Lanski and the I. Lanski & Son Scrap Iron Co. in the conduct of their business, severally purchase iron and steel scrap in carload lots from various dealers located in various States of the United States, and each of them causes such iron and steel scrap to be shipped to their respective yards at Chicago, Ill., where it is unloaded, separated, classified, and sold and shipped to purchasers thereof, located in the various States of the United States. PAR. 4. That during the year 1918 certain railway companies caused to be delivered to the respondent at his yards in Chicago, Ill., seven carloads of iron and steel scrap that had been theretofore purchased by and consigned to the I. Lanski & Son Scrap Iron Co., at its yards in Chicago, Ill.; that the respondent without having invoices, bills of lading, purchase contracts, or negotiations with the shipper, sufficient to justify the acceptance of the seven cars, or for believing that said shipments were intended for him, accepted, unloaded, and converted to his own use the said seven cars of iron and steel scrap; that during the year 186395°—20——20

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1917 two cars of scrap iron shipped and consigned to the I. Lanski & Son Scrap Iron Co. were accepted, unloaded, and converted to the use of respondent, and that respondent had no bill of lading, purchase contract, invoice, or negotiation with the shipper of said cars sufficient to justify him to believe that same belonged to him; that the effect of the respondent's acts in accepting and converting to his own use the said nine cars of scrap iron caused the I. Lanski & Son Scrap Iron Co. to suffer a pecuniary loss and confusion and delay in the conduct of its business.

CONCLUSION.

From the foregoing findings the Commission concludes that the methods of competition set forth in paragraph 4 of said findings is, under the circumstances therein set forth, in violation of the provisions of section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

ORDER TO CEASE AND DESIST.

The Federal Trade Commission, having issued and served its complaint herein, and the said respondent, Jacob Lanski, having filed his answer admitting certain allegations of the complaint and denying certain others thereof, and the Commission having offered testimony in support of its charges in said complaint, and the respondent having offered testimony in his behalf, and the attorneys for the Commission and the respondent having submitted their briefs as to the law and facts in said proceeding, and the Commission having made and filed its report containing its findings as to the facts and conclusion that the respondent has violated section 5 of an act of Congress approved September 26, 1914, entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," which said report is hereby referred to and made a part hereof: Now, therefore, It is ordered, That the respondent, Jacob Lanski, his agents and employees, cease and desist while engaged in

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302 Complaint.

competition in commerce among the several States of the United States from accepting and unloading cars of iron and steel scrap, where there is doubt whether the consignee is Jacob Lanski or the I. Lanski & Son Scrap Iron Co., until every available source of information establishing ownership has been investigated and that a record of the investigation to establish ownership of such cars be kept.

FEDERAL TRADE COMMISSION v.

HIMES UNDERWEAR CO.