Hamilton, Harris & Co

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IN THE l\IATI'ER OF HAMILTON, HARRIS & CO.

COMPI.AINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. 5 OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 1,253. Complaint, Aug. 21, 1940-Decision, Aug. 26, 191,1 Where a corporation engaged in competitive interstate .sale and distribution of fishing tackle, pipes, robes, cameras, and other articles, and of certain assortments of said merchandise so packed and assembled as to Involve the use of games of chance, gift ·enterprises, or lottery schemes when sold and distributed to consumers, a typical assortment including a number of pipes with a punchboard for use in theit· sale and distribution to the consuming public under a plan, as thereon explained, by which selection of certain lucky numbers entitled purchasers to receive one of said pipes, value of which was in excess of the 5 cents paid, and purchasers failing thus to qualify received nothing for their money other than the privilege of making a punch- Sold such assortments to dealers and jobbers and, directly or indh·ectly, to retailers, by whom they were exposed and sold to the purchasing public in accordance with afoz·esald sales plan, Involving chance to procure an article at much less than its normal price, and thereby supplied to and placed in the hands of others a means of conducting lotteries in the sale of its merchandise, contrary to an established public policy of the United States Government, and in violation of the criminal laws, and in competition with m11,ny who are unwilling to use a method of sale involving a game of chance and refrain therefrom;

With the result, because of such game of chance, of unfairly diverting trade in commerce to it from its said competitors, to the substantial injury of competition in commerce:

Held, That such acts auu practices, undet· 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 acts an.tl practices therein.

Before Mr. lV. W. Sheppard, trial examiner. Mr. L. P. Allen, Jr., and Mr. J. V. Mishou for the Commission. 11/atson, Ross, McCord & Ice, of Indianapolis, Ind., 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 Hamilton, Harris & Co., a corporation, 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 HAMILTON, HARRIS & CO. 1155 1154 Complaint interest of the public, hereby issues its complaint, stating its charges in that respect as :follows :

PARAGRAPH 1. Respondent, Hamilton, Harris & Co., is a corporation organized and existing under the laws of the State of Indiana, with its principal office and place of business located at 302 West South Street, Indianapolis, Ind. The respondent has branch offices and places of business located at Terre Haute, Kokomo, South Bend, and Richmond, Ind. Respondent is now and :for more than 2 years last past has been engaged in the sale and distribution of fishing 'tackle, pipes, robes, cameras, and other articles of merchandise. Respondent causes and has caused said merchandise, when sold, to be transported from its places of business as aforesaid to purchasers thereof, at their respective points of location, in the various States of the United States other than the State of Indiana and in the District of Columbia. There is now and has been for more than 2 years last past a course of trade by said 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 said business respondent is and has been in competition with other corporations and with individuals and with partnerships engaged in the sale and distribution of like or similar 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 its business, as described in paragraph 1 hereof, respondent se,lls and has sold to wholesale dealers, jobbers and retail dealers, certain assortments of merchandise so packed or assembled as to involve the use of games of chance, gift enterprises, or lottery schemes when sold and distributed to the consumers thereof. One of said assortments is hereinafter described for the purpose of showing the method used by respondent, and is as follows:

This assortment consists of a number of pipes, together with a device commonly called a punchboard. Said pipes are sold and distributed to the consuming public by means of said punchboard in the following manner: Sales are 5 cents each, and when a punch is made from the board a number is disclosed. The numbers begin with 1 and continue to the number of punches there are on tha board, but the numbers are not arranged in numerical sequence. The board bears the statement or statements informing purchasers and prospective purchasers that certain specified numbers entitle the purchaser thereof to receive a pipe. A purchaser who does not qualify by obtaining one of the lucky numbers receives nothing for his money other than the privilege of punching a number from the 1156 FEDERAL TRADE COJ\lmission DECISIONS Complaint 33 F. T. C. board. The pipes are worth more than 5 cents each, and the purchaser who obtains one of the numbers calling for one of the pipes receives the same for the price of 5 cents. The numbers are effectively concealed from purchasers and prospective purchasers until a punch or selection has been made and the particular punch separated from the board. The said pipes are thus distributed to purchasers of punches from the board wholly by lot or chance. Respondent sells and distributes, and has sold and distributed, various assortments of merchandise along with punchboards involving a lot or chance feature, but such assortments are similar to the ' one hereinabove described and vary only in detail. PAR. 3. Retail dealers who directly or indirectly purchase respond· ent's said merchandise, expose and sell the same to the purchasing public in accordance with the sales plan aforesaid. Respondent thus supplies to and places in the hands of others the means of conducting lotteries in the sale of its merchandise in accordance with the sales plan hereinabo~e set forth. The use by respondent of said method in the sale of its merchandise and the sale of said merchandise by and through the use thereof, and by the aid of said 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 thereoi ~fimy persons, firms, and corporations who sell or distribute merchandise in competition 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 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 its 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 various States of the United States and in the District of Columbia, to respondent from its 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 HAMILTON, HARRIS & CO. 1157 1154 Fl!:!dings 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- ~pondent'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 August 21, 1940, issued and subsequently served its complaint in this proceeding upo~ respondent Hamilton, Harris & Co., a corporation, charging it 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. After the issuance of said complaint nnrl the filing of respondent's answer. thereto, testimony, and other evidence in support of the allegations of said complaint were introduced by attorneys for the Commission and in opposition to the allegations of the complaint by attorney for the respondent before an examiner of the Com- 1 mission theretofore duly designated by it, and said testimony and other evidence were duly recorded and filed in the office of the Commission.

Thereafter the proceeding regularly came on for final hearing before the Commission on the said complaint, the answer thereto, testimony and other evidence, report of the trial examiner, and brief in support of the complaint (no brief having been filed by respondent and oral argument not having been requested); 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 FACTS PARAGRAPH 1. Respondent, Hamilton, Harris & Co., is a corporation organized and existing under the laws of the State of Indiana, with its principal office and place of business located at 302 1Vest South Stroot, Indianapolis, Ind. The respondent has branch offices and places of business located at Terre Haute, Kokomo, South Bend, and Richmond, Ind.

PAR. 2. Respondent is now, and for several years last past has been engaged in the sale and distribution of fishing tuck)e, pipes, robes, Findings 33F.T. C.

cameras, and other articles of merchandise. Respondent causes and has caused said merchandise, when sold, to be transported from its places of business as aforesaid to purchasers thereof at their respective points of ~ocation in the various States of the United States other than the State of Indiana and in the District of Columbia. There is now, and has been for several years last past, a course of trade by said respondent in such merchandise in commerce between and among the various States of the United States and in the District of Columbia..

PAR. 3. In the course and conduct of its said business respondent is, and has been, in competition with other corporations and with individuals and partnerships engaged in the sale and distribution of like or similar merchandise in commerce between and among the various States of the United States and in the District of Columbia. PAR. 4. In the course and conduct of its said business the respondent has sold to wholesale dealers, jobbers, and retail dealers certain assortments of merchandise so packed or assembled as to involve the use of games of chance, gift enterprises, or lottery schemes, when sold and distributed to the consumers thereof. Illustrative of the method used by the respondent is the sale of an assortment consisting of It number of pipes and a device commonly called a punchboard. Such pipes ·were sold and distributed to the consuming public by means of said punch board device in the following manner: Sales were· 5 cents each and when a punch was made from the board a number was disclosed. The numbers began with 1 and continued to the number of punches there were on the board, but the numbers were not arranged in numerical sequence. The board carried the statement or statements that certain specified numbers entitled the purchaser thereof to receive a pipe. A purchaser who did not qualify by obtaining one of the lucky numbers received nothing for his money other than the privilege of punching a number from the board. The pipes were worth more than 5 cents each and the purchaser who obtained one of the numbers calling for one of the pipes received the same for the price of 5 cents. The numbers were effectively concealed from purchasers and prospe-Ctive purchasers until a punch or selection was made and the particular punch separated from the board. The said pipes were thus distributed to purchasers o£ punchee £rom the board wholly by lot or chance.

Respondent sold and distributed various assortments of merchandise, together with punchboards, involving a lot or chance feature similar to the one above described and varying therefrom only in detail, to purchasers in States other than the State of Indiana and in the District of Columbia prior to July 10, 1939. Subsequent to the HAMILTON, HARRIS & CQ. 1159 1154 Order said date respondent has sold and distributed, and sells and distributes, various assortments of merchandise with punchboard to purchasers within the State of Indiana.

PAR. 5. Retail dealers outside the State of Indiana who directlv or indirectly purchased respondents said merchandise prior to July 10, 1939, and dealers within the State of Indiana who purchased respondent's merchandise subsequent to said date exposed and sold the same to the purchasing public in accordance with the aforesaid sales plan. Respondent thus supplied to and placed in the hands of others the means of conducting lotteries in the sale of its merchandise in accordance with the sales plan above set forth. The use by re- !Opondent of said method of sale, and the sale of said merchandise by and through the use .thereof and by the aid of sn,id method, is a practice which is contrary to an established public policy of the Government of the United States and in violation of the criminal laws.

PAR. 6. The sale of merchandise to the purchasing public by the aforesaid method involves a game of chance or the sale of a chance to procure an article of merchandise at a price much less than the normal retail price thereof. Others who sell or distribute merchandise in competition with the respondent are unwilling to adopt and use a method of sale involving a game of chance and refrain therefrom. The use of said method by respondent, b£>cause of the same game of chance, has the tendency and capacity to, and does, unfairly divert trade in commerce between and among the various States of the United States and in the District of Columbia to respondent from its said competitors who do not use the same or an equivalent method. As a result thereof substantial injury 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 respondent as herein alleged are all to the prejudice and injury of the public and of respondent's competitors, and constitute unfair methods of competition jn com· lllerce and unfair 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 upon the complaint of the Commission, the answer of respondent, testimony and other evidence .in support of the allegations of 1160 FEDERAL TRADE CO:\Il\IISSIO~ DECISIOXS Ot·det· 33F.T.O.

said complaint and in opposition thereto taken before an examiner of the Commission theretofore duly designated by it, report of the trial examiner, and brief in support of the complaint (no brief having been filed by respondent and oral argument ·not having been requested), and the Commission having made its findings as to the facts and its conclusion that said respondent has violated the provisions of the Federal Trade Commission Act. It is ordered, That respondent, Hamilton, Harris & Co., a corporation, its officers, agents, representatives, and employees, directly or through any. corporate or other device, in connection with the offering for sale, sale, and distribution in commerce, as "commerce" is defined in the Federal Trade Commission Act, of fishing tackle, pipes, robes, cameras, or any other merchandise, do forthwith cease and desist from :

1. Selling or distributing any merchandise so packed or assembled that sale of such merchandise to the public are to be made, or may be made, by means of a game of chance, gift enterprise, or lottery scheme. · 2. Supplying to or placing in the hands of others punchboards, push or pull cards, pull tabs, or other lottery devices, either with assortments of merchandise or separately, which said punchboards, push or pull cards, pull tabs, or other lottery devices are to be used, or may be used, in selling or distributing said merchandise to the public. 3. Selling or otherwise disposing of any merchandise by means of a game of chance, gift enterprise, or lottery scheme. It is further ordered, That the respondent shall, within 60 days after service upon it of this order, file with the Commission a report in writing setting forth in detail the manner and form in which it has complied with this order.

SANFORD MILLS, ET AL, 1161 Complaint