Koolish, Samuel B

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IN THE MATTER OF SAMUEL H. KOOLISH TRADING AS ARLINGTON SALES COMPANY COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLA.TION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket .pso. Complaint, July 11, 1940-Dccision, Dec. 12, 1940 Where an Individual engaged in lnterstate sale and distribution of radios, tlash· lights, clocks, cameras, pen and pencil sets, and other articles of merchandise in competition with others engaged in sale and distribution of like or similar articles in commerce as aforesaid; in soliciting sale of and distributing his merchandise-- }'urnished various devices and plans of merchandising which involved operation of games of chance, gift enterprises, or lottery schemes when merchandise was sold and distributed to ultimate consumer thereof, and involved dis· tribution to operators and purchasing public of certain literature and in· structions including push cards, order blanks, illustrations of his said merchandise, and circulars explaining his plan of selling same and of allotting it as premiums or prizes to operators of such push cards and to purchasing and consuming public under various push-eard schemes including (a) scheme through which, and in accordance with explanatory legend set forth on 15 card, purchaser or customer succeeding in selecting by chance that 1 of feminine names displayed thereon corresponding with name concealed under card's master seal secured candid camera and roll of film, or article of merchandise being thus disposed of, and customer securing certain specified number received pen and pencil combination, and amount paid for chan~e was determined by number secured by chance under disk pushed on card 1n acco1·dance with name selected, and (b) other push-card schemes which~ involved sale and distribution of his said products by means of gam.~ ~ chance, gift enterprise, or lottery scheme similar to that hereinabove descnb and varying therefrom In detail only; and Supplied thereby to and placed in the hands of others the means of conducting lotteries In the sale of his merchandise in accordance with such sales pi~: by persons to whom he furnished said push cards and who used same b purchasing, selling, and distributing his ~aid products in accordance wit! such plan, under which fact as to whether purchaser received an article 0 merchandise or nothing, and amount of money and bow much he was to P~~ and which of said articles if any he was to receive, were determined who e by lot or chance, and involving game of chance or sale of a chance to procu~­ one of said articles at price much less than normal retail price thereof, ~0 10 trary to an established public policy of the United States Government an iii· violation of the criminal laws, and in competition with many who are unW Ie lng to adopt and u,;e said or any metholl involving game of chance or sato of a chance to win something by chance or any other method contrary public policy and refrain therefrom; yed With result that many persons wet·e attracted by sales plan or method emp 10t of by him In sale and distribution of his said merchandise, and by elemen ARLINGTON SALES CO. 99 98 Complaint· chance involved therein, and were thereby induced to buy and sell his said products in preference to those offered for sale by his said competitors, who do not use same or equivalent method, and with effect, through use of said method and because of said game of chance, of unfairly diverting trade in commerce to him from his competitors aforesaid, who do not use such o.r equivalent method; to the substantial injury of competition iu commerce: Held, 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 practices therein.

Mr. D. 0. Daniel for the Commission.

Nash & Donnelly, of Chicago, Ill., for respondent. COMPLAINT Pursuant to the provisions of the Federal Trade Commission Act and by virtue of the authority vested in it by said act, the Federal !trade Commission, having reason to believe that Samuel H. Koolish, Individually and trading as Arlington Sales Co., hereinafter referred to as respondent, has violated the provisions of said act, and it appearing to the Commission that a proceeding by it in respect thereof Would be in the interest of the public, hereby issues its complaint, stating its charges in that respect as follows: PARAGRAPH' 1. Respondent Samuel H. Koolish is an individual trading as Arlington Sales Co. with his principal office and place of business located at 210 ·west 8th Street, Kansas Cit~, l\Io.' The respondent is now, and for more than 8 months last past has been, engaged in the sale and distribution of radios, flashlights, clocks, calDeras, pen and pencil sets, and other articles of merchandise. llespondent causes and has caused said merchandise, when sold, to • be transported from his aforesaid place of business in the State of ~~missouri to purchasers thereof, at their respective points of location, in the various States of the United States other than Missouri and in the District of Columbia. There is now and has been for more than 8 m~nths last past a course of trade by respondent in such merlJcha.ndise in commerce between and among the various States of the nited States and in the District of Columbia. In the course and c~nduct of his business, respondent is, and has been, in competition With other individuals, partnerships, and corporations engaged in the sale and distribution of like or similar articles of merchandise in <;olninerce between and among the various States of the United States and in the District of Columbia.

p .A.R. 2. In the course and conduct of his business as described in Paragraph 1 hereof, respondent, in soliciting the sale of and in Complaint 32 F.T. C.

selling and distributing his merchandise, furnishes and has furnished various devices' and plans of merchandising which involve the operaiton of games of chance, gift enterprises, or lottery schemes when said merchandise is sold and distributed to the ultimate consumer thereof. The method or sales plan adopted and used by respondent is substantially as follows:

Respondent distributes and has distributed to operators and the purchasing public certain literature and instructions, including among other things push cards, order blanks, illustrations of his said merchandise, and circulars explaining respondent's plan of selling merchandise and of allotting it as premiums or prizes to the operators of said push cards and to the purchasing and consuming public. One of respondent's push cards bears 15 feminine names with ruled columns on the reverse side thereof for writing in the name of the cus· tomer opposite the feminine name selected. Said push card has 15 partially perforated disks on the face of which is printed the word "push." Each of such disks is set over one of the aforesaid feminine names. Concealed within each disk is a number which is disclosed only when the disk is pushed or separated from the card. The push card also has a large master seal, and concealed within the master seal is one of the feminine names appearing on the face of said card. The person selecting the feminine name corresponding to the one under the master seal receives a camera. The person selecting a certain designated number set out in the legend at the top of said card also received a pen and pencil set. The push card bears a legend or instructions as follows :

NAME UNDER SEAL RECEIVES A PICKWIK CANDID CAMERA WITH BOLL OF FILM No. 19 Receives a Pen & Pencil Combination No. 1 pays 1¢; No. 19 pays 19¢.

No. 27 pays 27¢; No. 29 pays 29¢;

All others pay 29¢; NONE HIGHER.

Sales of respondent's merchandise by means of said push cards are made in accordance with the above-described legend or instructior:s· Said prizes or premiums are allotted to the customers or purchasers J1l accordance with the above-described legend or instructions. The facts as to whether a purchaser receives an article of merchandise or nothf ing for the amount of money paid, and which of said articles 0 merchandise the purchaser is to receive, if any, are thus determined wholly by lot or chance.

ARLINGTON SALES CO. 101 98 Complaint Respondent furnishes and has furnished various other push cards accompanied by order blanks, instructions, and other printed matter :for use in the sale and distribution of his merchandise by means of a game of chance, gift enterprise, or lottery scheme. The sales plan or method involved in connection with the sale of all of said merchandise by means of said other push cards is the same as that hereinabove described, varying only in detail.

PAR. 3. The persons to whom respondent furnishes, and has furnished, the said push cards use the same in purchasing, selling, and distributing respondent's merchandise in accordance with the aforesaid sales plan. Respondent thus supplies to, and places in the hands of, others the means of conducting lotteries in the sale of his merchandise in accordance with the sales plan hereinabove set forth. The use by respondent of said sales plan or method in the sale of his merchandise and the sale of said merchandise by and through the use thereof and by the" aid of said sales plan or method is a practice of a sort which is contrary to an established public policy of the Government of the United States and in violation of the criminal laws. PAR. 4. The sale of merchandise to the purchasing public in the ~ manner above alleged involves a game of chance or the sale of a chance to procure one of the said articles of merchandise at a price much less than the normal retail price thereof. Many persons, firms, and corporations who sell or distribute merchandise in competiti.on with the respondent, as above alleged, are unwilling to adopt and use said method or any method involving a game of chance or the sale of a chance to win something by chance, or any other method that is contrary to public policy, and such competitors refrain therefrom. Many persons are attracted by said sales plan or method employed by respondent in the sale and distribution of his merchandise and the element of chance involved therein, and are thereby induced to buy and sell respondent's merchandise in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the same or an equivalent method. The use of said method by respondent, because of said game of chance, has a tendency and capacity to, and does, unfairly divert trade in commerce between and among the \Tarious States of the United States and in the District of Columbia to respondent from his said competitors who do not use the same or an equivalent method. As a result thereof, substantial injury is being, and has been, done by respondent to competition in commerce between and among the various States of the United States and in the District of Columbia.

PAR. 5. The aforesaid acts and practices of respondent, as herein alleged, are all to the prejudice and injury of the public and of re- Findings 32F.T.C.

spondent's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. REPORT, FINDINGS AS TO THE FACTS, AND ORDER Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission on July 11, 1940, issued and thereafter served its complaint in this proceeding upon said respondent Samuel H. Koolish, individually and trading as Arlington Sales Co., charging him with the use of unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce in violation of the provisions of said act. Respondent filed no answer in this proceeding. Thereafter a stipulation was entered into whereby it was stipulated and agreed that a statement of facts signed and executed by counsel for respondent and ,V, T. Kelley, Chief Counsel for the Federal Trade Commission, subject to the approval of the Commission, may 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 said Commission may proceed upon said statement of facts to make its report, stating its findings as to the facts and its conclusion based thereon, and enter its order disposing of the proceeding without the presentation of argument or the filing of briefs. Respondent's counsel also waived the filing of a trial examiner's report upon the evidence.

Thereafter this proceeding regularly came on fur final hearing before the Commission on said complaint and stipulation, said stipulation having been approved, accepted, and filed; 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. Respondent Samuel H. Koolish is an individual trading as Arlington Sales Co. with his principal office and place of business located at 210 W('st 8th Street, Kansas City, 1\Io. The respondent is now, and for more than 1 year last past has been, engaged in the sale and distribution of radios, flashlights, clocks, cameras, pen and pencil sets, and other articles of merchandise. Respondent causes and has caused said merchandise, when sold, to be transported from his aforesaid place of business in the State of Missouri to purchasers thereof at their respective points of location, in the various ARLINGTON SALES CO. 103 98 Findings States of the United States other than Missouri and in the District of Columbia. There is now, and has been for more than 1 year last past, a course of trade by respondent in such merchandise in commerce between and among the various States of the United States and. in the District of Columbia. In the course and conduct of his business, respondent is, and has been, in competition with other individuals, partnerships, and corporations engaged in the sale and distribution of like or similar articles of merchandise in commerce between and among the various States of the United States and in the District of Columbia.

PAR. 2. In the course and conduct of his business as described in paragraph 1 hereof, respondent, in soliciting the sale of and in selling and distributing his merchandise, furnishes and has furnished various devices and plans of merchandising which involve the operation of games of chance, gift enterprises, or lottery schemes when said merchandise is sold and distributed to the ultimate consumer thereof. The method or sales plan adopted and used by respondent is substantially as follows:

Respondent distributes and has distributed to operators and the purchasing public certain literature and instructions, including among other things push cards, order blanks, illustrations of his said merchandise, and circulars explaining respondent's plan of selling merchandise and of allotting it as premiums or prizes to the operators of said push cards ana to the purchasing and consuming public. One of respondent's push cards bears 15 feminine names with ruled colum:ns on the reverse side thereof for writing in the name of the customer opposite the feminine name selected. Said push card has 15 partially perforated disks on the face of which is printed the word "push." Each of such disks is set over one of the aforesaid feminine names. Concealed within each disk is a number which is disclosed only when the disk is pushed or separated from the card. The push card also has a large master seal, and concealed within the master seal is one of the feminine names appearing on th(', face of said card. The person selecting the feminine name corresponding to the one Under the master seal receives a camera. The person selecting a certain designated, number set out in the legend at the top of said card also receives a pen and pencil set. The push card bears a legend or instructions as follows:

NAME UNDER SEAL RECEIVES A PICKWIK CANDID CAMERA WITH ROLL OF :FILM Findings 2 F. T. C. No. 19 Receives a Pen & Pencil Combination. No. 1 pays 1¢; No. 19 pays 19¢.

No. 27 pays 2:7¢; No. 29 pays 29¢.

All others pay 29¢. NONE HIGHER.

Sales of respondent's merchandise by means of said push cards are made in accordance with the above-described legend or instructions. Said prizes or premiums are allotted to the customers or purchasers in accordance with the above-described legend or instructions. The facts as to whether a purchaser receives an article of merchandise or nothing for the amount of money paid, how much money he is to pay, and which of said articles of merchandise the purchaser is to receive, if any, are thus determined wholly by lot or chance. Respondent furnishes and has furnished various other push cards :tccompanied by order blanks, instructions, and other printed matter for use in the sale and distribution of his merchandise by means of a game of chance, gift enterprise, or lottery scheme. The sales plan or method involved in connection with the sale of all of said merchandise by means of said other push cards is the same as that hereinabove described, varying only in detail. PAR. 3. The persons to whom respondent furnishes, and has furnished, the said push cards, use, and have used the same in purchasing, selling, and distributing respondent's merchandise in accordance with the aforesaid sales plan. Respondent thus supplies to, and places in the hands of, others the means of conducting lotteries in the sale of his merchandise in accordance with the sales plan hereinabove set forth. The use by respondent of said sales plan or method in the sale of his merchandise and the sale of said merchandise by and through the use thereof and by the aid of said sales plan or method is a practice of a sort which is contrary to an established public policy of the Government of the United States and in violation of the criminal laws.

PAR. 4. The sale of merchandise to the purchasing public in the manner above found involves a game of chance or the sale of a <~hance to procure one of the said articles of merchandise at a price much less than the normal retail price thereof. .Many persons, firms, and corporations who sell or distribute merchandise in competition with the respondent, as above found, are unwilling to adopt and use said method or any method involving a game of chance or the sale of a chance to win something by cliance, or any other method that is contrary to public policy, and such competitors refrain therefrom· .Many persons are attracted by said sales plan or method employed by respondent in the sale and distribution of his merchandise and the element of chance involved therein, and are thereby induced to ARLINGTON SALES CO. 105 98 Order buy and sell respondent's merchandise in preference to merchandise offered for sale and sold by said competitors of respondent who do not use the same or an equivalent method. The use of said method by respondent because of said game of chance has a tendency and capacity to, and does, unfairly divert trade, in commerce between and among the various States of the Uniwd States and in the District of Columbia, to respondent from his said competitors who do not use the same or an equivalent method. As a result thereof, substantial injury is being, and has been, done by respondent to competition in commerce between and among the various States of_ the United States and in the District of Columbia. CONCLUSION The aforesaid acts and practices of the respondent as herein found are all to the prejudice and injury of the public and of respondent's competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce within the intent and meaning of the Federal Trade Commission Act. ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commission (respondent having filed no answer thereto), and a stipulation as to the facts entered into between counsel for the respondent and ,V. T. Kelley, Chief Counsel for the Commission, which provides among other things that without further evidence or other intervening procedure the Commission may issue and serve upon the respondent herein findings as to the facts and conclusion based thereon and an order disposing of the proceeding, 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 is ordered, That the respondent Samuel H. Koolish, individually and trading as Arlington Sales Co. or trading under any other name or names, his representatives, agents, and employees, directly or through any corporate or other device in connection with the offering for sale, sale, and distribution of radios, flashlights, clocks, cameras,. pen and pencil sets, or any other merchandise in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from :

1. Supplying to or placing in the hands of others, push or pull cards, punchboards, or other lottery devices which are to be used or may be used in the sale and distribution of any merchandise to the Public by means of a game of chance, gift enterprise, or lottery scheme. Order 32F. T. C.

2. Mailing, shipping, or transporting to agents or to distributors or to members of the public, push or pull cards, punchboards, or other devices so prepared or printed that said push or pull cards, punchboards, or other devices are to be used or may be used to sell or distribute any merchandise to the public by means of a game of chance, gift enterprise, or lottery scheme.

3. Selling or otherwise disposing of any merchandise by the use of push or pull cards, punchboards, or other lottery device. It is further ordered, That the 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.

CRAZY WATER CO. ET AL. 107 Syllabus