Beho Rubber Co., Inc.

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IN THE MATTER OF BEHO RUBBER CO., INC., AND BERNARD HOLTZMAN, MAE MURRAY AND MILTON M. HOLTZMAN, INDIVIDUALLY AND AS OFFICERS AND DIRECTORS OF BEllO RUBBER CO., INC., ALSO TRADING AS THE BEST TIRE HOUSE, THE MODERN IMPROVED RETREAD OUTLET, AND THE ASSURED REMOLDED TIRE DISTRIBUTORS.

COMPLAINT, FINDINGS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SEC. o OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Docket 3973. Complaint, Dec. 11, 19.'19-Decision, Dec. :ll3, 1911 Where a corporation and two individuals, general officers thereof, engaged, under corporate and various other trade names, in competitive interstate sale and distribution of retreaded or recapped tires for automobiles, trucks, and busses; in seeking to induce salesmen to accept employment with them through advertisements in newspapers and other publications of general circulation, and through their "crew managers" whom they employed to travel in the various States seeking salesmen and purchasers for their products- (a) Represented that they paid their salesmen a salary of $40.00 a week and commission, and all expenses while being trained; and (b) Represented that they manufactured the retreaded or recapped tires which they sold, and used only the best carcasses, 1. e., best quality of used tires, ln their said products; · Notwithstanding fact they did not pay their salesmen aforesaid salary, or any other sum per week, and a commission, or any of the expenses of beginners employed by them, did not manufacture their said products, and the carcasses used by them were only of average quality and in many 'instances Inferior to the average used in such tires; and Where said corporation and individuals, engaged as aforesaid; through their salesmen whom they supplied with sales kits, order blanks and literature bearing various trade names made use of by them, and with cross-cut sections of tires to display to customers; as typical of many similar claims- ( c) Represented that the tires purchased from them would be identical in quality 1 with the samples displayed by salesman taking an order, and of the size ordered by the purchaser, that carcasses used by them were less than 1 year old, that their tires would be free from boots or patches, were suitable for the purpose for which they were purchased, and would give many miles ot service in normal course of usage at a fraction of the cost of new tires; The facts being they did not ship to purchasers tires of the same quality as the sample displayed by their salesman, but made a practice of shipping shoddy and in many ~ases worthless tires; they had no way of knowing the age of the carcasses they used, which, in some instances, were old and useless; said products in most instances did contain boots and patches, and, furthermore, were not suitable for purposes for which purchased, and In many Instances were serviceable for a few days only, if as much; (d) Falsely represented that the tires would be shipped to the purchaser from points In his vicinity, and that they would ship tires on consignment, and Complaint 34F.T. C.

represented the freight rate as lower than was the fact, and, further, contrary to the fact, that they would supply purchasers with free tire racks and metal tire stands and would pay one-half the expenditures Incurred by purchasers in advertising their products; and • (e) Falsely represented that corporation in question and purported concerns represented by some seven or eight trade names they used had no connection or affiliation with one another and were separate and distinct competitive businesses, engaged in sale and distribution of products in question, of which they further represented themselves falsely as the manufacturers, notwithstanding they had never made such products but purchased them from various sources;

With the result that their salesmen, as aforesaid, were enabled to misrepresent the true status of their business and, under another trade name, were enabled to make sales of their products to those who had had previous unsatisfactory dealings with them; and • Where said corporation and individuals- (/) Made use of a disclaimer of liability clause under the warranty clause in their order blanks In order to escape liability from the promises and representations of their salesmen, which was not called to the attention of purchasers signing the order blanks and was so inconspicuously placed that in most instances it was not observed by such purchasers, who had the right to assume said warranty clause as intended for their protection; (g) Guaranteed, in said warranty clause, to replace unsatisfactory merchandise upon payment of one-half of the Jist price, notwithstanding fact such undertaking was not guarantee at all, since payment of amount thus called for approximated cost of the tire to them and the purchaser was required to pay shipping charges before any such replacement was made; and (h) Made a practice of shipping to purchasers unsatisfactory and worthless tires, in many cases not worth the shipping charges paid by the purchaser, and not in any manner suitable for the purpose for which they were intended and purchased;

\With effect of misleading and deceiving salesmen and prospective salesmen, and purchasers and prospective purchasers of their tires into the erroneous belief that aforesaid false, misleading and deceptive representations and implications were true, and of causing a substantial number of purchasing public, because of said belief, to act as salesmen for them and to purchase substantial numbers of their said products:

Ileld, That such acts and practices were all to the prejudice and injury of the public, and competitors, and constituted unfair and deceptive acts and practices in commerce.

Before Mr. Edward E. Rea;rdon, trial examiner. Mr. Charles S. OorJJ for the Commission.

Col\lplaint 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 Beho Rubber Co., Inc., a corporation, and Bernard Holtzman, Mae Murray, and Milton M. BEHO RUBBER CO., INC., ET AL. 459 457 Complaint Holtzman, individually and as officers and directors of Beho Rubber Co., Inc., also trading as the Best Tire House, the Modern Improved Retread Outlet, and the Assured Remolded Tire Distributors, have "Violated the pro-visions of said act, and it appearing to the Commission that a proceeding by it in respect thereof would be in the public interest, hereby issues its complaint stating its charges in that respect as follows: PARAGRAPH 1. Respondent, Beho Rubber Co~, Inc., is a corporation · organized, existing and doing business under and by virtue of the laws of the State of Illinois, having its office and principal place of business at 2441 Indiana A-venue, Chicago, Ill. Respondents Bernard Holtzman, Mae Murray, and Milton M. Holtzman are individuals and are president, secretary, and -vice president, respectively, and members of the board of directors of the respondent Beho Rubber Co., Inc. All of · said individual respondents have offices and place of business at 2441 Indiana Avenue, Chicago, Ill. Respondents, Beho Rubber Co., Inc., Bernard Holtzman, Mae Murray, and Milton M. Holtzman, are trading and doing business under various trade names, including The Best Tire House The Modern Improved Uetread Outlet, and The Assured . ' Remolded Tire Distributors, at various addresses in the city of Chicago, as well as under the name of the corporate respondent. The business conducted under said various trade names is conducted from 2441 Indiana. A venue, Chicago, Ill.

The respondents, Beho Rubber Co., Inc., Bernard Holtzman, Mae Murray, and Milton M. Holtzman, have acted in concert and in cooperation each with the other in doing the acts and things hereinafter alleged.

PAR. 2. Respondents are now, and for more than 18 months l[lst past have been, engaged in selling and distributing used tires which have been retreaded or recapped. Said retreaded or recapped tires are for use on automobiles, trucks, and busses. Respondents cause said retreaded or recapped tires, when sold by them, to be transported from their said place of business in Chicago, Ill., to the purchasers thereof at their respective points of location 'in the various States of the United States, other than the State of Illinois, and in the District of.Columbia. Respondents maintain, and at all times mentioned herein l1ave maintained, a course of trade in said retreaded and recapped tires 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 their aforesaid business and for the purpose of inducing salesmen to accept employment 'with respondents and thus to further the sale of their said products, respondents have caused numerous advertisements to be inserted in Complaint 34F.T. C.

newspapers and other publications circulated generally among pros· pective agents and purchasers throughout the United States and in the District of Columbia, which contain statements and representations relative to employment with respondents. Similar statements and representations are made to prospective agents and purchasers by "crew managers" employed by the respondents who travel in the various States of the United States and in the District of Columbia, seeking agents and ·purchasers for respondents' said products. Among and typical of the representations and statements made in newspapers and other publications are the following: HELP WANTED--MEN MEN WITH CARS-To travel, selling automotive products; attractive salary and commission. See 1\f, H. Shepard, 8: 30 to 2: 00. 2441 S. Indiana .Avenue.

Through said advertisements, statements, and representations made by said crew managers, respondents represent that salesmen employed by them are paid a salary of $4:0 a week and commission, and that all expenses of salesmen will be paid by the respondents while such salesmen are being trained, and that the respondents manufacture the retreaded or recapped tires they sell, and that they use only the best carcasses, that is, the best quality of used tires, in their retreaded or recapped tires. Many other statements and representations of similar import and meaning are made and used by the respondents in securing salesmen to further the sale of their said product. The aforesaid representations and implications used by the respondents are false, misleading and deceptive, for in truth and in fact respondents do not pay their salesmen a salary of $40 a week, or any other sum per week, and a commission, nor do they· pay any of the expenses of beginners employed by them; they do not manufacture the retreaded or recapped tires sold by them; and the carcasses used in the retreaded or recapped tires sold by the respondents, in most instances, are only of average quality, and are, in many cases, inferior to the average carcass used in retreaded or recapped tires. PAR. 4. In the course and conduct of their business as aforesaid, and for the purpose of inducing the purchase of their said products, respondents have made, or caused to be made through their salesmen traveling throughout the various States of the United States nnd in the District of Columbia, many statements and representations to the purchasing public concerning their said retreaded or recapped tires, the quality thereof, and the terms and conditions under which BEHO RUBBER CO., IN"C., ET AL. 461 457 Complaint said tires are offered for sale and sold. Among and typical of the representations so made by the respondents are the following: 1. That the tires purchased from the respondents will be identical jn quality with the samples displayed to the purchaser by the salesman taking the order. . 2. That carcasses used by the respondents in their retreaded or reca pped tires are less than 1 year old.

3. That respondents' tires will be free from boots or patches. 4. That the tires shipped by the respondents will be of the size ordered by the purchaser and will be shipped to the purchaser from points in the vicinity in which the purchaser is located. 5. That respondents will ship tires to purchasers on consignment. 6. That the freight rate on respondents' tires will be a lower rate than the actual rate applying to such shipments. 7. That iarge concerns, such as Sears, Roebuck & Company, sell retreaded or recapped tires, and that the respondents supply Sears, Roebuck & Company with retreaded or recapped tires for resale to the purchasing public. · 8. That respondents will supply purchasers of their tires with free tire racks and metal tire stands, and that they will pay one-half of the advertising expenditures incurred by purchasers in advertising respondents' products.

9. That Beho Rubber Co., Inc., 2441 Indiana Avenue, Chicago, Ill., The Best Tire House, 2433 Indiana A venue, Chicago, Ill., The Modern Improved Retread Outlet, 709 South Dearborn Street, Chicago, Ill., and The Assured Remolded Tire DistriJmtors, 2441 Indiana Avenue, Chicago, Ill., have no connection or affiliation with each other and that they are each separate and distinct businesses and in competition with each other in the sale and distribution of retreaded or recapped tires. . 10, That respondents' tires are suitable for the purpose for which they are purchased, nnd that they will give many miles of service in the normal course of usage at a fraction of the cost of new tires. 11, That respondents are the manufacturers of the retreaded or recapped tires sold by them.

Many other statements and representations of similar import or meaning are made and used by the respondents in connection with the sale and distribution of their retreaded or recapped tires. Respondents supply their sales agents .with sales kits, order blanks, nnd other literature under the different names and addresses under Which respondents do business, and with sample tires or cross-cut Complaint 34F.T.C.

sections of tires to be displayed to customers, and in connection with the trade names The nest Tire House, The Modern Improved Retread Outlet, and The Assured Remolded Tire Distributors, the order blanks supplied to such salesmen and upon which the signatures of the purchasers are secured contain under the designation "Warranty," "Our ·warranty,'' or "Agreement" a disclaimer of liability for any promise <'lr representation, express or implied, not set forth on said order blank. This disclaimer of liability for any promise or representation, express or implied, not set forth in said order blank is placed under the designation "'Varranty," "Our "\Varranty," or "Agreement" for the purpose of concealing the disclaimer from purchasers. Respondents also use various guarantees which lead purchasers to believe that said products are of good quality, and respondents represent that if such tires are not as guaranteed they will be replaced for one-half price. · PAR. 5. The aforesaid acts and practices, representations, and implications used and disseminated by the respondents as aforesaid are misleading and deceptive, for in truth and in fact respondents do not E>hip tires to purchasers of the same quality as the samples displayed by their salesmen, but make a practice of shipping shoddy and, in many cases, worthless merchandise instead; respondents have no way of knowing the age of the carcasses used in the retreaded or recapped tires sold by them, and, in many instances, the tires are made of old and useless tires. Respondents' tires are not free from boots and patches, and, in most instances, contain boots and patches. Respondt>nts do not, in all instances,, ship purchasers tires of the size ordered, and shipments of respondents' tires are not made from points in the vicinity in which the purchaser is located, except in the vicinity of Chicago, Ill., and the freight rate applying to purchases from respondents is often much higher than it is represented to be by respondents' salesmen. Sears, Roebuck & Co. does not sell retreaded or recapped tires, and respondents do not sell retreaded or recapped tires to Sears, Roebuck & Co. Respondents do not supply purchasers with free tire racks, nor metal stands, nor do they pay one-half of the advertising expenditures incurred by purchasers in advertising re- !'pondents' products.

Respondents, in supplying their salesmen with sales kits, order blanks, and literature for the nest Tire House, the Modern Improved Hetread Outlet, and the Assured Remolded Tire Distributors, and sample tires or cross-cut sections of tires to display to customers, thus enable the salesmen to misrepresent the true status of respondents' business, and to represent that the businesses conducted under the various trade names used are each in competition with the other, and BEHO RUBBER CO., INC., ET AL. 463 457 Complaint thereby they are enabled to procure purchases of respondents' products from persons having previous unsatisfactory dealings with respond· ents under one or the other o£ said trade names. In truth and in fact all orders secured by the respondents under any of said trade names, or in the name o£ the corporate respondent, are received at and filled from 2441 Indiana A venue, Chicago, Ill., and not at the other listed addresses.

Respondents resort to the disclaimer o£ liability clause placed in said order blanks under the "'Varranty" or other designations in deny· ing liability for the promises and representations made to purchasers by their salesmen. The disclaimer o£ liability clause in such orders is not called to the attention o£ purchasers o£ respondents' products who sign such order blanks nor is it observed in most instances by such purchasers because of the fact that it is placed in an unusual and inconspicuous place in said order blanks. Respondents' guarantee Under their warranty to replace unsatisfactory merchandise upon pay· :rnent of one-hal£ of the list price is in truth and in fact no guarantee at all, for the payment of this amount approximates the cost of the merchandise to the respondents and the purchaser is required to prepay the shipping charge before any such replacement is made. Respondents make a practice o£ shipping unsatisfactory and worth· less merchandise to purchasers, which, in many 'instances, is not worth the freight or shipping charges paid by the purchaser; in many instances respondents' merchandise is not suitable in any manner for the purpose for which it was intencl~d and purchased by the purchaser, and the purchaser thereof will not secure "many miles" of service or any service whatsoever, from said tires, and the cost of the service obtained through the use of respondents' said tires is not but a £rae· tion of the cost of the service secured from new tires, but is, in truth and in fact, generally in excess of the cost for service which would be incurred through the use of new tires. None of the respondents make or manufacture the retreaded or !'('Capped tires offered for sale and sold by them, nor do any of respondents operate or control, a plant or factory where such tires are manufactured. The tires sold by the respondents are purchased :from various sources. PAR. 6. The aforesaid acts and practices of the respondents in con· llection with the offering for sale, sale and distribution of said re· treaded and recapped tires have had, and now have, a capacity and tendency to, and do, mislead and deceive salesmen and prospc>ctive salesmen and purchasers and prpspective purchasers of respondents' said products into the erroneous and mistaken belief that the afore· said false, misleading, and deceptive representations and implications are true, and cause a substantial number of the purchasing public, 464 •. FEDERAr; TRADE COMMISSION~ DECISIONS ' Find~ngs. 34 F. T.C. because of said erroneous and ·mistaken belief; to 'purcliase a snbstan. tial number of respondents' said tires. . · · PAR. 7. 'The aforesaid acts and. practices: of 'the respondents as herein .alleged· are all to the prejl).dice of the puolic and constitute unfair and'deceptive acts ai1d practices in commerce within the intent and ineaning of the Federal Trade Com1hission Act .. : REPORT, FINDINGS AS TO.THE FACTS, AND ORDER . Pursuant to the provisions of the Fed ai Trade c6mmission. Act, the:·:Federal Trade Commission on Dec~niber 14' A. D. 1939, issued ~nd thereafter ser~ed its compl~int in .this· proceeding·.upon the nispondents, Beho Rubber Co~, Inc., a c;orporation; . and Bernard Holtzman, Mae Murray, and. Milton, M. Holtzman, individually and ~s-yflj.ce_i·s· and directors of B!'Jho ·Rubber Co., I~c.,, also trading as tl;le Best .Tire House, the Modern Iniproved Retread· .Outlet, and *he Ass~red R,~molded Tire Distributors, chargi1ig the~· with unfair arid cd,decep~ive act~ and .:Practid)s .in commerce in vi_olation of the provisiops ·of said. act. . . . ·· After the issuance of the complaint and the _filing of respondents' answer .thereto',. testimony and' other evidence in support of the ii.'llegations. of the complaint were introduced by Charles· S. Cox, and in opposit~~n thereto 'by Eclnyfed H. Willian_1s and Alqert E. Hallett, ~~., attorneys for the respondents, before .Edward E. Reardon, a duly appointec:l trial exari1iner 'of .the C9mmission designated by it t.o serve i'1i. this proceeding. The \testimony and other .evidence introduced were duly recorded and filed in the office of the Commis· sion. · i'hereafter, the proceeding regularly came on for. final,hearing_ before the. Commission on the complaint,· the answers thereto. the testim.ony and·· other evidence, rep~rt of the trial·· examiner there?ll . and exceptions thereto, and briefs filed on behalf· of the ComJUJS· · .;.;, sion and of the respondents:•And the Cmnmission having duly con· · .~?idered the matter and being now fully ad-vised in the 'premises, ~hat their proceeding ·is l.n the interest: of the public and makes its findings as to the facts and ~t,s conclu,'3ion drawn therefrom: ,, .. FINDINGS AS TO THE FACTS : PARAGRAPH L Respondent, Beho Rubber Co:, Inc., is a · organired under the laws of the. State of Illinois, and up Octooer 1939/its principal· office ·a I) d. place ·of busiiiess· was located 2441 India1ia· ·Avenue, Chien go; Ill., and since that· date,· at S~uth 1\fic~ig[m· Aven~e~. Chicago;· Iil R'esronc:e~t~: Bei·nard BEHO . RUBBER CO., INC:, ET - AL~ 465 Findings Htn and Milton. M. ·Holtzman, are president and vice president, Jlespectively, and members _of the board of directors of respondent ;orporation, and respondent ~iae Mu.rray at ()ne time was secretary and a memper of the board. of directors of. ~es~o:z:dent corporation, but is no longer such secre~ary. ~ll:of the mdrvxlual respondents; except Mae Murray have; si1ice October 1939, had 'their -ofl.i9es and 1rnces of business at ~427 South Michigan Avenue, Chicago, Ill. I PAR. 2. The cqrporate. respmident and tlie''individual respoi1dents are trading and doing business thtder various trade namd, 1 includ~ ing "Tl~e Best Tire House," "The Modern I1npt?ved Retr.ead Outlet,"."The Manufacturers Ret1;eacl Outlet;" "The Assured Remolded Tire .. Dist~·ibutqrs," "The Red Flame Tire Co.," ""James Rubber Co.,". "Retread Ti~·e Distributors" and "The Honor 'Tire Excliange." All_· of the responden~s ha,;~ acted i11 concert :and in· cooperation· each with the other in doing the thiiigs•hereinafter set foi-th .. · ·/ · · '· PAR. 3. Respondehts for more· than 18 months prior to -December 14, 1939, · we~e engaged and nO\~· are engaged in selling and dis~rib~t~ jno"t:l used tires which had. been retreaded. ot recapped~ for use on . automobiles, trucks and .bus~es. Respondents cause said tires' to be transported from ·their plqce of business in Chicago, Ill., to. purchasers thereof at their i·espective points of location in' vat:ious States of the United States· and. in th~ District of Columbia. Respondents maintained and nqw m~intain a course of trade in said tires in commerce between al).d among tli.e various States of tlie United States and in the District of Columbia.· · PAR. 4. R~spondents,-in the GOUrse and conduct 'of their business, as set forth herein, have been _and now are in competition with other corporations, individuals and partnerships ep.gaged 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. 5. Respondents, in the course and' conduct of their business and for the purpose of ii1ducing salesmen to accept employment with respondents and thus to Jurther the sale of their products, have caused 1~umerous advertisemei1ts to be inserted in newspapers and other publications circulated generally among· prospective salesmen. and purchasers throughout t~1e United-. States, whch 'contain. state-: ments and repr:esentatiqns re~ative to ·employment with respondei).ts. Similar· statemmits and · representi1tions are made to r)r6spect1~·e salesmen ap.d purchasers by ."ere~ ITianagers'.' employed by .respon~'~ ents to travel in the varioi1s States. of the United States, seeking salesmen and purchasers for respondents' products. Amonli and 4G6506"'_:_42-vol. 34-30 Findings 34 F. T. C. typical of the representations and statements made in newspapers and other publications are the following:

:MAN WITH car-to travel selling automotive products; attractive salary and commission; must be ready to leave for road immediately. See M. H. Shepard, 8:30 to 2:30,2441 South Inuiana Ave.

SALESMAN WITH OAR TO TRAVEL. Selling tires; tire experience unnecessary. Pos· sible earnings equal to 1928-1929 "boom days." No investment or deposit on kits necessary. See Mr. Hallett, Pennsylvania Hotel, • • •. A witness testified that one of respondents' advertisements stated a salary of $40 a week and commissions would be paid by respondents to agents. M. H. Shepard, one of respondents "crew managers," acting on behalf of respondents, advised persons answering respondents' ad· vertisements for salesmen, that if they acted as respondents' salesmen in the sale of their tires, they would receive a salary of $40 a week and commissions, and that all their expenses,would be paiJ by respondents while they were being trained; that the respondents manufactured. the retreaded or recapped tires sold by them and used only the best carcasses; that js, the best quality of used tires, in their retreaded or recapped tires.

The aforesaid representations and implications are false, misleading, and deceptive, in that respondents do not pay their salesmen a salary of $4:0 a week, or any other sum per week, and a commission, nor do they pay any of the expenses of beginners employed by them; they do not manufacture the retreaded or recapped tires sold by them, and the carcasses used in the retreaded or recapped tires sold by them, in most instances, are only of average quality and in many instances are inferior to the average carcasses used in retreaded or recapped tires. P.AR. 6. Respondents, in the course and conduct of their business, and :for the purpose of inducing the purchase of their products, have made, or caused to be made through their salesmen traveling throughout the various States of the United States many statements and representations to the purchasing public concerning respondents' retreaded or recapped tires, the quality thereof and the terms and conditions under which said tires are offered for sale and sold. Among and typical of the representations so made or caused to be made, are the following: 1. That the tires purchased from the respondents will be identical in quality with the samples displayed to the purchaser by the salesman taking the order.

2. That carcasses used by respondents in their retreaded or recapped tires are less than 1 year old.

3. That respondents' tires will be free from boots or patches. BEHO RUBBER CO., INC., ET AL. 467 457 Findings 4. That the tires shipped by the respondents will be of the size ordered by the purchaser and will be shipped to the purchaser from points in the vicinity in which the purchaser is located. 5. That respondents will ship tires to purchasers on consignment. 6. That the freight rate on respondents' tires will be a lower rate than the actual rate applying to such shipments. 7. That large concerns, such ns Sears, Roebuck & Co., sell retreaded or recapped tires and that the respondents supply Sears, Roebuck & Co. with retreaded or recapped tires for resale to the peychasing public. 8. That respondents will supply purchasers of their tires with free tire racks and metal tire stands, and that they will pay one-hal£ the advertising expenditures incurred by purchasers in advertising respondents' products.

9. That Deho Rubber Co., Inc., 2441 Indiana Avenue; the Best Tire · House, 2433 Indiana A venue; the Modern Improved Retread Outlet, 709 South Dearborn Street; the Assured Remolded Tire Distributors, 2441 Indiana Avenue; Manufacturers Retread Outlet; Red Flame Tire Co., 1829 South State Street; James Rubber Co., Sixteenth Street and South Michigan Ayenue; Retail Tire Distributors, 1656 Indiana AYenne, and since December 14, 1939, the Honor Tire Exchange, 2427 ~outh Michigan Avenue-all located in Chicago, Ill-have no connection or affiliation with each other, and that they are each separate and distinct businesses and are in competition with each other in the sale and distribution of retreaded or recapped tires. 10. That respondents' tires are suitable for the purpose for which they are purchased, and that they will gi>e many miles of service in the normal course of usage at a fraction of the cost of new tires. 11. That respondents are the manufacturers of the retreaded or recapped tires sold by them. • PAR. 7. The representations and .im]~lications set forth in paragraph 6 are false, misleading, and deceptive m that: 1. Respon,dents do not ship tires to purchasers thereof of,the same quality as the sample displayed to the purchaser by their salesman taking the order, but, on the contrary, respondents in filling such orders make a practice of shipping shoddy and in many cases, worthless tires. 2. Respondents have no way of knowing the age. of the carcasses used in the retreaded or recapped tires sold by them, and in some instances the tires are made of old and useless tires. 3. Respondents' tires nre not free from boots and patches, but m most instances contain boots and patches.

4. Respondents do not, in all instances, ship purchasers tires of the size ordered, and shipments of respondents' tires are not made from \ Findings 34 F. T.C. points in the vicinity in which the purchaser is located, except in the vicinity of Chicago, Ill.

5. Respondents do not ship tires to purchasers on consignments. 6. The freight rates applying to purchasers from respondents are often much higher than as represented by respondent~. 7. Sears, Roebuck & Co. never bought any tires from respondents. From 1934 to February 1939, said company sold and distributed retreaded tires purchased by them from the Delco Co.; but since February 15, 1939, they have not sold any retreaded tires except in their Chicago retail branch store, to close out their stock. 8. Respondents do not supply purchasers with free tire racks or metal stands, nor do they pay one-half of the advertising expenditures incurred by purchasers in advertising respondents' tires. 9. Respondent's representations that the various concerns mentioned in subparagraph 9 of paragraph 6 have no connection or affiliation with each other and that they are each separate and distinct businesses and in competition with each other, are false, in that all of the said businesses are controlled by the respondents and are, in reality, merely trade names used by the respondents. · Respondents have but one place o£ business, which is now located at 2427 South Michigan Avenue, and was formerly located at 2441 Indiana Avenue, Chicago. The various other addresses are of premises occupied by small business concerns with which respondents have arranged for the reception of their mail addressed to one of their several trade names, and the orders contained in· the mail so received are filled from the place of business of the respondents.

10. Hespondents tires are not suitable for the purposes for which they are purchased and will not give many miles of service in the normal course of usage at a fraction of the cost of new tires, but in fact, in many instances when so used they are only serviceable for a few days. In one instance shown a purchaser, upon receiving one of respondents' tires, sought to inflate it after mounting it on a spare, and the tire blew out at 35 p~unds pressure. 11. Respondents have never manufactured the tires sold by them, nor do any of the respondents own or control a plant or factory wherein such tires are manufactured. Respondents purchase their tires from various sources.

PAR. 8. Respondents supply their salesmen with sales kits, order blanks and literature bearing the various trade names used by respondents, as hereinbefore set forth, and furnish them with cross-cut sections of tires to display to customers, thus enabling the salesmen BEHO ItUBBER CO., INC., ET AL. 469 457 Findings to misrepresent the true status of respondents' business and to repre· sent that the businesses conducted under- the various trade names Used are ea2h in competition with the other, and said salesmen are thereby enabled to make sales of respondents' products to persons having had previous unsatisfactory dealings with respondents under one or another of said trade names.

In truth and in fact, all orders secured by respondents under any of the said trade names, or in the name of too corporate respondent, 'Were filled and shipped from respondents' place of business located at 2441 Indiana A venue, Chicago~ Ill., and not from the other listed addresses, until, in October 1939, and since that date, they have been filled from 2427 South .Michigal}. Avenue, Chicago, Ill. · Respondents, in order to escape liability from the promises and representations made to purchasers by their salesmen, resort to a disclaimer, of liability clause placed in its order blanks under the "warranty" clause. The disclaimer of liability clause in such orders is not called to the attention of purchasers of respondents' products 'Who sign such order blanks, nor in most instances is it observed by such purchasers, because it is so inconspicuous}~ placed in the order blanks, and purchasers assume, and hav~ the nght to assume, that ~he "warranty" clause is intended for their protection. Respondents, Jn their warranty clause, guarantee to replace unsatisfactory merchandise upon payment of one-half of the list price, but this is, in fact, no guarantee at all, as the payment of this amount approximates the cost of the tires to the respondents, and the purchaser is required to pay the shipping charges before any such replacement is made. ' Respondents make a practice of shipping unsatisfactory and worthless tires to purchasers, which in many cases, are not worth the freight or shipping charges paid by the purchaser. In many cases the tires ~re not in any manner suitable for the purpose for which they were lntended and purchased.

PAR. 9. The aforesaid acts and practices of the respondents in connection with the offering for sale, sale and distribution of their retreaded or recapped tires, have had, and now have, the capacity and tendency to, and do, mislead and deceive salesmen and prospective salesmen, and purchasers and pr~spective purchasers of respondents' tires into the erroneous and mistaken belief that the aforesaid fals~, misleading, and deceptive representations and implications are true, :md cause a substantial number of the purchasing public, because of said mistaken and erroneous belief, to act as salesmen for the respondents and to purchase substantial numbers of said ti~es. Order 3-!F. T. C. CONCLUSION The aforesaid acts and practices of the respondents are all to the prejudice and injury of the public and of respondents' competitors, and constitute 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 Cornmission upon the complaint of the Commission, the answers of respondents, testimony, and other evidence in support of and in opposition to the allegations of the complaint, the report of the trial examiner thereon and exceptions thereto, and briefs filed in behalf of the Commission and of the respondents; and the Commission having made its findings as to the facts and its conclusion that the respondents have violated the provisions of the Federal Trade Commission Act. It is ordered, That the respondent, Beho Rubber Co., Inc., a cor· poration, also trading as the Best Tire House, the Modern Improved Retread Outlet, and the Assured Remolded Tire Di~tributors, its officers, directors, agents, representatives, and employees, and respondents Bernard Holtzman, Mae Murray, and Milton M. Holtzman, individually and as officers and directors of Beho Rubber Co., Inc., trading under its corporate name or under any of its said trade names, or any trade name or names, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution of retreaded or recapped tires, in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from representing:

1. By the use of purported samples or otherwise that the tires sold by respondents are of a quality or value different from that of the actual quality or value of such tires. . 2. That the "carcasses" used by respondents in their retreaded or recapped tires nre less than 1 year old, when such is not the fact. 3. That tires which are not free from boots or patches are free from boots or patches.

4. That the tires shipped by respondents will be of sizes ordered by the purchaser, unless said sizes are furnished. 5. That tires ordered by purchasers will be shipped from any point other than the actual point of shipment.

6. That respondents will ship tires to purchasers on consignment unless such tires are shipped on consignment. 7. That the freight rate on respondents' tires will be lower than the actual rate applying to such shipments. BEHO RUBBER CO., INC., ET AL. 471 457 Order 8. That, except for sale over the counter at its retail store in Chicago, Sears, Roebuck & Co. sell retreaded or recapped tires. 9. That respondents supply Sears, Roebuck & Co. with retreaded or recapped tires for resale to the public. 10. That respondents will supply purchasers of their; tires with free tire racks and metal tire stands, when such is not the fact. 11. That respondents will pay one-hal£ or any other portion of the advertising expenditures incurred by purchasers in advertising respondents' products unless respondents pay such amounts to such purchasers as represented.

12. That the business conducted by respondents under' their several trade names has no connection with and is not a part of the business of respondents.

13. That tires which contain boots tor patches, rotten rubber or other defects which render them not suitable for ordinary usage are suitable for ordinary usage and flom representing that such tires will give many miles of service in the normal course of usage at a fraction of the cost of new tires.

14. That respondents manufacture the retreaded or recapped tires sold by them.

15. That any specified salary or commission is paid salesmen for the sale of respondents' products in excess of that actually paid. 16. That persons learning to become salesmen will be reimbursed for the expenses incurred by them in this connection, when such is not the fact.

17. That tires· are sold under a warranty against defects, unless all the terms and con~itions of such warranty are conspicuously set forth and strictly complied with.

And do further cease and desist from- Inserting"b in the warranty clause of their• order blanks a disclaimer of liability for promises and representations made purchasers by their salesmen.

It is further ordered, T~1at the respo~dent shall, within 60 days after service upon them of this order, file With the Commission a report in writing setting forth in detail the manner and form in which they have complied with this order.

Syllabus 34F.T.O.