Pennsylvania Whiskey Distributing Corp

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IN THE MATTER OF PENNSYLVANIA WHISKEY DISTRIBUTING CORPORATION COMI'LAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 2576. Complaint, Oct. 11, 1935-Decision, Dec. 23, 1937 \Vhere a corporation engaged, as wholesale distributor and rectifier of alcoholic liquors, in purchasing and bottling whiskies and other distilled spirits and in· selling its aforesaid various products to wholesaler and retailer purchasers in other States and In the District of Columbia, In substantial competition with those engaged in the manufacture by distillation of · whiskies and other distilled spirits and in 8selling same In trade and com- ' merce Etmoug the various States and In said District, and with those engaged In purchash1g, rectifying, blending, and bottlh1g such various · distilled spirits and similarly seiUng same, and including among said com- , 'f>etltors those who, as manufacturers and distillers from mash, wort, or wash of the whiskies and other distilled spirits sold by them, truthfully user words "distillery," "distilleries," "distillers," "distilling," or "distilled products" as a part of their corporate or trttde names and on their stationery, cartons and labels of the bottles In which they sell and ship their said products, those who, engaged In purchasing, rectifying, blending, and ·bottling such various products, do not use aforesaid words as above set fohh, 'and those who, engaged In sale of whiskies and other distilled spirits, do not, as a means of furthering and promoting sale of their said products, misrepresent as official Internal Re>enue Bonded 'Yarehouse Receipts their own unofficial paper receipts or paper writings- ( a) Represented, through use of abbreviation "Dist." in its corporate name, as · :m~lated on its stationery, cartons, labels, contracts, und advertising, and warehouse receipts, used by It in soliciting and obtaining sale of Its products, to its customers, and furnished same with menus. of representing to their vendees, both retailers and ultimate consuming public, that it was a distilling company and that the whiskies and other distilled spirits by it sold were by It made through process of distillation from mash, wort, or w~;~.sh. notwithstanding fact it did not thus distill said various spirits, as long definitely understood from word "distilling" used in connection with ~iquor industry and products thereof, in the trade and by the ultimate purchasing public, did not own, operate, or control any place or places where ·such spirits are made by such process, and was not a distiller, for the purchase of the bottled whiskey and other spirits of which there is a preference on the part of a substantial portion of the purchasing public; and (b) Falsely designated as "United States Internal Revenue Bonded Warehouse Receipts~' certain paper writings ~r receipts delivered to its customers and covering distilled spirits stored in bonded warp houses in other States, as' means of furthering and promoting sale of its said products, facts being said writings or receipts were contracts between it and customer whereby . it ,WI\S obligated to sell, and customer was obligated to buy, quantity of disti~led spirits located in aforesaid warehouses under bond, and for which CO~IMISSION DECISIONS98 FEDERAL TRADE Complaint 26F.T.C.

It had and retained the genuine United States Internal Revenue Bonded Warehouse Receipts, and pursuant to which contracts, and upon request of purchasers, it caused such spirits to be released and delivered to it for rectillcatlon or bottling and labeling, and then shipped to such various purchasers, and said receipts or writings were not, as thus falsely represented, the official United States Internal Revenue Bonded 'Varehouse Receipts sufficient to release bonded spirits covered thereby upon payment by xmrchasers of storage charges, insurance, State and Federal taxes; With effect of misleading and deceiving dealers and purchasing public into the belief that said whiskies and other distilled spirits sold by it were· by it made or distilled from mash, wort, or wash, and of misleading and deceiv• ing dealers into belief that, upon presentation to bonded warehouse of aforesaid unofficial warehouse receipts by them obtained from it, the whiskies and distilled spirits thus purchased would be released from bond for delivery to a duly authorized rectifier for rectifying or rebottling, or both, as desired, upon payment by said dealers of storage charges, insurance and State and Federal taxes, and of inducing dealers and purchasing public, acting in such beliefs, to buy its said whiskies and other distilled spirits, and of thereby diverting trade to it from its competitors who do not make the same or similar representations; to the substantial injury of substantial competition in commerce:

Held, That such acts and practices were to the prejudice of the public and competitors and constituted unfair methods of competition. Before Mr. John W . .Addison, trial examiner. Mr. PGad B. Morehouse for the Commission.

Mr. Irving H. Goldin, of New York City, and Mr. Harold N. Reinitz, of Brooklyn, N. Y., for respondent. COMPLAINT Pursuant to the provisions 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," the Federal Trade Commission, having reason to believe that Pennsylvania Whiskey Distributing Corporation, hereinafter referred to as respondent, has been and now is using unfair methods of competition in commerce, as "commerce" is defined in said act, and it appearing to the said 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:

PARAGRAPH 1. Respondent is a corporation organized, existing, and doing business under the laws of the State of New York, with its office and principal place of business in the city of Brooklyn in said State. It is now and for more than one year last past has been engaged in the business of a wholesale distributor and rectifier of alcoholic liquors, purchasing and bottling whiskies and other distilled spirits and selling the same in constant course of trade and PENNSYLVANIA WHISKEY DISTRIBUTING CORP. 99 97 Complaint commerce between and among the various States of the United States and in the District of Columbia. In the course and conduct of its business, it causes its said products when sold to be transported from its place of business as aforesaid into and through various States of the United States to the purchasers thereof, consisting of wholesalers and retailers located in other States of the United States and in the District· of Columbia. In the course and conduct of its business as aforesaid, respondent is now and for more than one year last past has been in substantial competition with other corporations and with other individuals, partnerships, and firms engaged in the manufacture by distillation of whiskies and other distilled spirits and in the sale thereof in trade and commerce between and among the various States of the United States and in the District of Columbia; and in the course and conduct of its business as aforesaid, respondent is now, and has been for more than one year last past, in substantial competition with other corporations and with individuals, firms, and partnerships engaged in the business of purchasing, rectifying, blending, and bottling whiskies and other distilled spirits and in the sale thereof in commerce between and among the various States of the United States and in the District of Columbia. PAR. 2. For a long period of time the word "distilling," when used in connection with th~ liquor industry, has had and still has a definite significance and meaning in the minds of the wholesalers and retailers in such industry and to the ultimate purchasing public, to wit, the manufacturing of whiskey and other distilled spirits by a process of original distillation from mash, wort, or wash; and a substantial portion of the purchasing public prefers to buy whiskey and other distilled spirits prepared, or bottled by the actual distillers thereof.

PAR. 3. In the course and conduct of its business as aforesaid, by an abbreviation of the word "Distributing" to "Dist." in its corporate name as printed on stationery, cartons, labels, contracts, advertising, and warehouse receipts used by it in soliciting and obtaining the sale of its products as aforesaid, and in various other ways, respondent represents to its customers and furnishes them with the means of representing to their vendees, both retailers and the ultimate consuming public, that it is a distilling company and that the whiskies and other distilled spirits by it sold were by it manufactured through the process of distillation from mash, wort, or wash as aforesaid, when, as a matter of fact, respondent is not a distiller, does not distill the said whiskies or other distilled spirits by it so sold and transported, and does not own, operate, or control any place Complaint 26F.T.C.

or places where such spirits are manufactured by the process of distillation from mash, wort, or wash.

PAR. 4. In the course and conduct of its business as aforesaid, and as a means or method of furthering and promoting the sale of its said products, respondent delivers to its customers· certain paper writings or receipts by it falsely designated as "United States Internal Revenue Bonded ·warehouse Receipts," covering di$tilled spirits stored in bonded warehouses located in States other than the State of New York, which said paper writings or receipts are contracts between respondent and the customer whereby the respondent is obligated to sell and the customer to buy a quantity of distilled spirits located in the aforesaid warehouses under bond, and for which distilled spirits respondent has and retains the genuine United. States Internal Revenue Bonded 'Varehouse Receipts. Pursuant to such contracts, and upon the requests ·of the purchasers, respondent causes such bonded spirits to be released and delivered-d to it for rectification or bottling and labelling as aforesaid and then causes the said distilled spirits so released, delivered, bottled, and labelled "to be shipped from its place of business as aforesaid to the purchasers thereof located in the State of New York and in various other States of the United States and in tile District of Columbia, In the aforesaid manner, respondent falsely represents that its own warehouse receipts and contracts for the bonded liquor as aforesaid are official United States Internal Revenue Bonded '\Varehouse Receipts, sufficient to release the bonded spirits covered thereby, upon payment by the purchaser of the storage charges, insurance, State, and Federal taxes.

PAR. 5. There are, among the competitors of respondent engaged in. the sale of whiskies and distilled spirits as mentioi1ed in paragraph 1 hereof, corporations, firms, partnerships, and individuals who manufacture and distill from mash, wort or wash as aforesaid the whiskies and other distilled spirits sold by them, and who truthfully use the words "distillery," "distilleries," "distillers," "distilling," on "distilled products" as a part of their corporate or trade names and on: their stationery 1 cartons, and labels of the bottles in which they sell and ship such products. There are also among such competitors1 corporations, firms, partnerships, and individuals engaged in the business of purchasing, rectifying, blending, and bottling whiskies and other distilled spirits who do not use the words "distillery," "distill~ eries," "distillers," "distilling," or "distilled products" as a part of. their corporate or trade names nor on the stationery, cartons, and labels of the bottles in which they sell and ship their said products. PENNSYLVANIA WHISKEY DISTRIBUTING CORP. 101 Findings ·There are also, among such competitors, corporations, firms, partnerships, and individuals engaged in the sale of whiskies and other distilled spirits who, a:s a means or method of furthering and promoting the sale of said products do not misrepresent as official United States Internal Revenue· Bonded 'V a rehouse Receipts their own unofficial receipts or paper writings as an inducement to the sale of their said products.

: PAR. 6. Tlie representations by respondent as set forth in paragraphs 3 and 4 hereof are calculated to and have the capacity and tendency to and do mislead and deceive dealers and the purchasing public into the belief that the whiskies and other distilled spirits sold by· respondent are manufactured and distilled by it from mash, wort~ or wash; and do mislead and deceive dealers into the belief that upon presentation to the bonded warehouse of the aforesaid unofficial warehouse receipt by them obtained from respondent, the whiskies or distilled spirits so purchased will be released from bond for deliv- .ery to· a duly authorized rectifier and bottler of their selection for ~·ectification or rebottling or both, as desired, upon payment by the. said dealers of the storage charges, insurance, and State and Federal 'taxes; and such repi'e~entations are calculated to, have the capacity and tendency to, and do induce dealers and the purchasing public, acting in such beliefs, to purchase the whiskies and other distilled 'spirits sold by the respondent, thereby diverting trade to the respondent from its competitors who do not make the same or similar misrepresentations, and thereby respm~dent does substantial injury to ':substantial competition in interstate commerce. PAR. 7. The acts and things above alleged to l1ave been done and the false representations alleged to have been made by respondent are to the prejudice of the public and the competitors of respondent, and constitute unfair methods of competition in commerce within the meaning and intent of Section 5 of an Act of Congress entitled "An Act to .create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September 26, 1914. REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the. provisions 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," the Federal Trade Commission on October 11, 1935 issued, and later served its complaint in this proceeding upon the respondent, Pennsylvania. 'Vhiskey Distributing Corporation, charging it with the use of unfair methods of competition in commerce in violation of the Findings 26F.T.C.

provisions o£ said act. After the issuance o£ said complaint and the filing of respondent's answer, the Commission, by order entered here· in, granted respondent's motion £or permission to withdraw said answer and to substitute therefor an answer admitting all the material allegations o£ the complaint to be true, and waiving the taking of further evidence and all other intervening procedure, which substitute answer was duly filed in the office of the Commission. Thereafter, this proceeding regularly came on for final hearing before the Commission on the said complaint and the substitute answer, briefs and oral arguments of counsel having been waived, and the Commission having duly considered the same and being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the facts and its conclusion drawn therefrom:

FINDINGS AS TO THE FACTS PARAGRAPH 1. This respondent is a corporation organized, existing and doing business under and by virtue of the laws of the State of Ne·w York. Its office and principal place of business is located at 135 Johnson Street in the _Borough of BrooklJll, in the city of New York, in said State. For more than one year last past, it has been engaged in the business of a wholesale distributor and rectifier of alcoholic liquors, purchasing and bottling whiskies and other distilled spirits and selling the same in constant course of trade and commerce between and among the various States of the United States and in the District of Columbia.' In' the course and conduct of its business, it causes its said products when sold to be trans:{>orted from its place of business as aforesaid into and through various States of the United States to the purchasers thereof, consisting of wholesalers and retailers located in other States of the United States aP.d in the District' of Columbia. In the course and conduct of its business as aforesaid, respondent is now and for more than one year last past has been. in substantial competition with other corporations and with other ·individuals, partnerships, and firms engaged in the manufacture by distillation of whis1.ies and other distilled spirits and in the sale thereof in trade and commerce between and among the various States of the United States and in the District of Coliunbia; and in the .course and conduct of its business as aforesaid, respondent is now, and has been for more than one year last past, in substantial competition with other corporations and with individual. firms, and partnerships engaged in the business of purchasing, rectifying, blending, and bot· tling whiskies and other distilled spirits and in the sale thereof in .commerce between and among the various States of the United States and in the District of Columbia.

PENNSYLVANIA WHISKEY DISTRIBUTING CORP. 103 Findings PAR. 2. For a long period of time the word "distilling," when used in connection with the liquor industry, has had and still has a definite significance and meaning in the minds of the wholesalers and retailers in such industry and to the ultimate purchasing public, to wit, the manufacturing of whiskey and other distilled spirits by · a process of original distillation from mash, wort, or wash; and a substantial portion of the purchasing public prefers to buy whiskey and other distilled spirits prepared or bottled by the actual distillers thereof.

PAR. 3. In the course and conduct of its business as aforesaid, respondent has abbreviated the word "Distributing" to "Dist." in its corporate name, as printed on its stationery, cartons, labels, contracts, advertising, and warehouse receipts used by it in soliciting and obtaining the sale of its products as aforesaid. In this way and in various other ways respondent has represented to its customers and furnished them with the means of representing to their vendees, both retailers and the ultimate consuming public, that it is a distilling company and that the whiskies and other distilled spirits by it sold were by it manufactured through the process of distillation from mash, wort or wash as aforesaid, when, as a matter of fact, respondent is not a distiller, does not distill the said whiskies or other distilled spirits by it so sold and transported, and does not own, operate, or control any place or places where such spirits are manufactured by the process of distillation from mash, wort, or wash. PAR. 4. Also in the course and conduct of its business as foresaid, and as a means or method of furthering and promoting the sale of its said products, respondent delivers to its customers certain paper writings or receipts by it falsely designated as "United States Internal Revenue Bonded Warehouse Receipts," covering distilled spirits stored in bonded warehouses located in States other than the State of New York, which said paper writings or receipts are contracts between respondent and the customer whereby the respondent is obligated to sell and the customer to buy a quantity of distilled spirits located in the aforesaid warehouses under bond, and for which distilled spirits respondent has and retains the genuine United States Internal Revenue Bonded ·warehouse Receipts. Pursuant to such contracts, and upon the requests of the purchasers, respondent causes such bonded spirits to be released and delivered to it for rectification or bottling and labelling as aforesaid and then causes the said distilled spirits so released, delivered, bottled, and labelled to be shipped from its place of business as aforesaid to the purchasers thereof located in the State of New York and in various other States of the United States and in the District of Columbia. In the Findings 26F.T.C.

aforesaid manner, respondent falsely represents that its own warehouse receipts and contracts for the bonded liquor as aforesaid are official United States Internal Revenue Bonded Warehouse Receipts, sufficient to release the bonded spirits covered thereby, upon payment by the purchaser of the storage charges, insurance, State and Federal taxes.

PAR. 5. There are, among the competitors of respondent engaged in the sale of whiskies and distilled spirits as mentioned in paragraph 1 hereof, corporations, firms, partnerships, and individuals who manufacture and distill from mash, wort, or wash as aforesaid the whiskies and other distilled spirits sold by them, and who truthfully use the words "distillery," "distilleries," "distillers," "distilling," or "distilled products" as a part of their corporate or trade names and on their stationery, cartons, and labels of the bottles in which they sell and ship such products. There are also among such competitors, corporations, firms, partnerships, and individuals engaged in .tlle business of purchasing, rectifying, blending, and bottling. whiskies and other .distilled spirits, who do not use the words "distillery," ~'dis- . tilleries," "distillers," "distilling," or "distilled products" as· a part of their corporate or trade names nor on the stationery, cartons, and labels of the bottles in which they sell and ship their said products. There are also, among such competitors, corporations, firms, .partnerships, and individuals engag«ld in the sale of whiskies and other distilled spirits who, as a means or method of furthering and promoting the sale of said products do not misrepresent as official United States Internal Revenue Bonded '\Varehouse Receipts their own: unofficial receipts or paper writings as an inducement to. the: 'sale of their said products.

PAR. 6. The representations by respondent as set forth in paragraphs 3 and 4 hereof are calculated to and have the capacity. and tendency to and do mislead and deceive dealers and the purchasing public into the belief that the whiskies and other distilled .spirits sold by respondent are manufactured and distilled by it from mash, wort or wash; and do mislead and deceive dealers into the belief that upon presentation to the bonded warehouse of the aforesaid unofficial warehouse receipt by them obtained from respondent, the whiskies or distilled spirits so purchased will be released from bond for delivery to a duly authorized rectifier and bottler of their selection for rectification or rebottling or both, as desired, upon· payment by the said dealers of the storage charges, insurance and: Sta:te and Federal taxes, and such representations are calculated to, have the capacity and tendency to, and do induce dealers and the purchasing public, acting in such beliefs, to purchase the whiskies and "Other distilled spirits sold by the respondent, thereby diverting trade to the PENNSYLVANIA WHISKEY DISTRIBUTING CORP. 105 97· Order respondent :from its competitors who do not make the same or similar misrepresentations, and thereby respondent does substantial injury to substantial competition in interstate commerce. CONCLUSION The aforesaid acts and practices of the respondent, Pennsylvania 'Vhiskey Distributing Corporation, are to the prejudice of the public and· of respondent's competitors, and constitute tmfair methods of' competition in commerce, within the intent and meaning of Section 5 o£ 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 This· proceeding having been heard by the Federal Trade Com'mission upon the complaint of the Commission and the answer filed herein. on the 21st day of December 1937, by respondent1 admitting all the triat~rial allegations of tlle complaint to be true, ~waiving.he~r~' ing on the charges set forth in the said complaint, and consenting that without further evidence or other intervening procedure the Commission may issue and serve upon it. findings as to the facts and conclusion drawn therefrom and an order to cease and desist from the violations of law charged in the complaint, and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the provisions o£ an Act of Congress approved September 2·6, 1914, entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes."

It is ordered, That the respomlent, Pennsylvania Whiskey Distributing Corporation, its officers, representatives, agents, and employees, in connection with the offering for sale, sale, and distribution of whiskies and other distilled spirits in interstate commerce or in the District of Columbia, do forthwith cease and desist from: 1. Representing by the use of the abbreviation "Dist." in its corporate name, as printed on stationery, cartons, labels, contracts, advertising, and all other paper writings used by it in soliciting, and obtaining the sale o£ its products, or in any other way by word or words of like import representing (a) that it is a distiller o£ whisldes, gins, and other alcoholic beverages; or (b) that the said whiskies, gins, and other alcoholic benrages were by it manufachtred through the process of distillation; or (c) that it owns, operates or controls a place or places where such beverage·s are manufactured by the process of distillation unless and until the said Order 26F.T.C.

respondent shall own, operate, or control a place or places where such whiskies, gins, and other alcoholic beverages are by it manufactured through a process of original and continuous distillation from mash, wort, or wash through continuous closed pipes and vessels until the manufacture thereof is completed. 2. Representing that its own warehouse receipts or contracts for the sale of liquors by it to its customers are United States Interna] Revenue bonded warehouse receipts sufficient to release the bonded spirits covered thereby upon payment by the purchaser of the storage charges, insurance, State and Federal taxes, or in any other manner representing that the purchaser is buying an official warehouse receipt for liquors stored in bonded warehouses when such is not the fact.

It is further ordered, That the said respondent within 60 days from and after the date of the service upon it of this order, shall file with the Commission a report or reports in. writing setting forth in detail the manner and form in which it is complying and has complied with the order to cease and desist hereinabove set forth. THE NATIONAL SURVEY CO., ETC. 107 Complaint