Fretted Instrument Manufacturing Corp., Etc

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IN THE MATTER OF JOHN CARNER, AS OFFICER OF FRETTED INSTRUMENT MANUFACTURING CORPORATION, ETC., ET AL.

COMPLAXNT, FINDU'GS, AND Ordel IN REGARD TO Tile ALLEGED VIOLATION' OF SEC. Ci OF AN ACT OF CONGRESS APPROVED SEPT. 26, 1914 Doeket -HH. Compla-int, Jan. i, 1941-Deci.~·ion, July 9, 11M2 'Where four officers of a corporation and Its successor, engaged in the. manu· facture and Interstate sale and distribution of stringed musical instruments such as guitars and mandolins, which depended upon the wood for tbelr resonance or amplification~ , Simulated the coQe amplifying device with which amplifying or resonating types of guitars and mandolins are equipped, and which pt·oduces a sound fro!Jl GO to s::; percent louder than that of an lnstt·ument made entirely froiD wood, through uflixing to the top of the body portion of their guitars and mandolins a polished perforated metal disk or plate (and, at one time, through painting the interior of their Instruments with aluminum paint which, when seen through the perforations in 'the disk, had the appearance of the amplifying cone), result of which was to give thell· instruments a metallic ring, but not to iucrease the l'Oiume or resonance of the tone, as lloes the coue;

\Vlth the result that the average person, on viewing the instrument, could not distinguiflh be,ween a genuine resonating or amplifying 011e and one of their said products decorated with a polished perforated metal, disk or plate; and with consequence that a number of deulel'·customers, by means of advertisements In musical magazines of general circulation, rept•esenteli that their products were so equipped: ' Jleld, That such acts and practices, under the circumstances set torth, were all to the prejudice and Injury of the public, and constituted unfair and ·deceptive acts and practices In commerce.

Defore Mr. 'Lewis C. Ru.~sell and Mr. John L. Hornor, trial examiners.

Mr. Joseph C. Fehr and Mr. Carrel F. Rhodes for the Commi~sion·· Complaint . . . Pursuant to the provisions of the Federal Trade Commission Act, 11nd by virtue of the authority vested in it by said act, the Federal Trade Commission having reason to believe that John Carner, indi~ vidually and as an officer of Fretted Instr\].ment Manufacturing Corpo~ ration and United Guitar Corporation; Morris llrooks, individually and as an officer of Fretted Instrument Manufacturing Corporo.tion; Frank Solvino and Frank Masiello, individually and as officers of United Guitar Corporation; Fretted Instrument :Manufacturing Cor~ poration, a corporation; and United Guitar Corporatio,n, a corporation, FRETTED INSTRUMENT MFG. CORP., ETC., ET AL. 113 112 Complaint he.reinafter referred to as respondents, .have violated the provisions of ~llld 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.. Since 1928, various concerns in the United States have .~la~ufactured certain stringed instruments, such as guitars and mand. ol~ns, containing a resonating or amplifying device consisting of a ehcate metal cone capped by a wooden bridge over which the string~ ' nre drawn. · Stringed instruments· equipped with said device produce, ;hen played, a quality of tone different from, more resonant than, and ~r superior to that produced by stringed instruments not so equipped. ~ P.erforated cover plate is affixed to the top of the body portion of S~e Instrument as a protection for the resonating or amplifying device. · lllce their introduction in or about the year 1928, stringed instru- ~en~s embodying such resonating or amplifying devices protected by a tilshnctive perfor~te~ plate ha~e atta.ined widesp.read public recognion and populanty m the stnnged mstrument mdustry and among ~~sic lovers generally. Such instruments equipped with said ampli-· Ylng, resonating device are preferred by a substantial number of the llurchasing public over instruments not so equipped. PA}1. 2. Respondents, John Carner, Morris Brooks, Frank Solvino and Frank l\Iasiello, are individuals, who are now, and for several Years last past have been, engaged in the manufacture and sale of vari- {)~s kinds of musicai instruments, including guitars and mandolins, \Vtth their principal office and place of business located at 45 Corneilson Avenue, in the city of Jersey City, in the State of New Jersey. Said l'e~pondent, John Carner, acting in conjunction and cooperation with said individual respolldents, Morris llrooks; Frank Solvino and Frank lrasiello, with a view to capitalizing upon and deriving large financial ,, ~l'ofits from the acknowledged superior quality and excellent reputa- • Ii tzon of stringed instruments equipped with the metal c~ne amplifying I l' devices.referred to in paragraph 1 hereof, proceeded to manufacture, I I ;o advertise and sell, and to place in the hands of various retail dealers II ?t resale, musical instruments, including mandolins and guitars, which I I 81lllulate in appearance, but do ·not actually possess the superior ' . I resonating or amplifying device consisting of the delicate metal cone capped by a wooden bridge over which strings nre drawn, as will be I; more fully set forth in detail hereinafter. Said individual respondent, ~hn Carner, acting in conjunction with said individual respondent, orris Brooks, and with a view to obtaining a larger market for the ~Usical instruments manufactured or to be manufactured by them, I lllcluding instruments simulating, but n~t actually containing or E'm- I ! I I I t !;' 114 . ' FE.DERAL TRADE COMMISSION DECISIONS Complaint 35 F. T. c; bodying said amplifying device, in November 1935, organized a com· pany, which was .incorporated,. under .. and by virtue of the laws of the State of New Jersey, under the name of Fretted Instrument Manu· facturing Corporation, a corporate respondent herein, with its principal office and place of business located nt 45 Corneilson Avenue in the city of Jersey City in the State of New Jersey. Respondent, John Carner, 1 then became and still is the president of said corporate respondent, II Fretted Instrument Manufacturing Corporation. Respondent, Morris· Brooks, is. vice' president of said corporate respondent, Fretted lnstru~ ment Manufacturing Corporation. Respondent, John Carner, assisted· I by and acting in conjunction and cooperation with respondent, Morr~ \ Brooks, is and has been actively in charge of, and directs and controls, I and has directed and controlled, the policies and operations of saidl ~~ corporate respondent, Fretted Instrument Manufacturing Corporation. Thereafter in June 1939 said respondent, John Carner, organized· aiwther company, also incorporated under and by virtue of the laws- ! of the State of New Jersey. This company employs and has employed: I the name United Guitar Corporation, and is a corporate respondent \ herein, with its principal office and place of business located at 45 1 Corneilson Avenue in the city of Jersey City, in the State of Ne,r Jersey. Respondent, John Carner, became and has continued to be the president of said corporate respondent, United Guitar Corpora' tion. Respondents, Frank Salvino and Frank Masiello, are respec· tively secretary and treasurer of said corporate respondent, United Guitar Corporation. Said John Carner, assisted by and acting in con' junction and cooperation with respondents, Frank Salvino and Frank Masiello, is and has been actively in charge of, and directs and con· trois, and has directed and controlled the policies and operations of said corporate respondent, United Guitar Corporation. ~PAR.· 3. Respondents are now, and for some time past have been, Pngaged in manufacturing, offering for sale, and selling stringed iw Btruments, including guitars and mandolins, in commerce between and' among the various States of the United States, and. in the District of Columbia. ·Respondents cause said products, when sold, to be transported. from their respective places of business in the State of .New" Jersey to purchasers thereof located in States o'f the United State~ other than the State of New Jersey, and inthe District of Columbia. Respondents maintain, and at all times mentioned herein have main· tained, a course of trade in said stringed instruments in conimerct> between and among the various States of the United States, and in the District of Columbia.

·PAn. 4. In the course and conduct of their respective businesses as ' described in. paragraphs 2 and 3 hereof, respondents manufacture or FRETTED INSTRUMENT MFG. CORP.J ETC., ET AL. 115 Complaint have had manufactured for them, offer for sal~ and sell to the musical ~~de. located in the various States of the United States and in th~ • tstr1ct of Columbia ~erlain stringed -instruments, including guitars nnd mandolins, having' a polished metal disk or plate affix~d to the top of the body portion thereof, said disk or plate containing a number of perforations through which can be seen a part of the interior of the body portion, which is so painted or colored that it simulates in np~enrance the resonating or amplifying devices contained in thie strrnged instruments referred to in paragraph 1 hereof. The manu~ facture and sale in commerce, as aforesaid,, of such stringed instru~ Inents constitutes and has constituted a very substantial part of tho entire business of the respondents.

PAR. 5. In soliciting the sale of and in selling their said products, · nnd for the purpose of creating a demand upon the part of the purc?asing public for said products, respondents now cause, and for some ~nne past have caused, advertisements and advertising matter to be ~nserted in mu~ic magazines having. wide circulatio.n among~ a~d etween the vanous States of the Umted States and m the Distnct. ?f Columbia. Typical of the advertising statements and represent ,, ~ntiQns so made by the respondents concerning their said stringe<1 Instruments is the following:

$9.90 List GUITAR OR MANDOLIN. DISC 'lop l\IARVELOUS TONEJ Supplied by your favorite jobber. If not write us.

United· Gu!taJ: Corporation.

In iHldition to and supplementing, the representations made by the' ~·respondents, as aforesaid, a number of dealers through whom saitl 11lstruments ultimately reach members of the public purchasing them for use, have also advertised respondents'- said prouucts. Typical of sllch statements and representations so made by dealers offering for Sale and selling respondents' said products, are the following: No. 248. The Guitar which hns created 11n all-time sales record; It has out~old llll other guitars and ·continued a "llest Seller." Nickel plated re~onator ornament adds resonance to its deep tone and richness to Its appearance. Amplifier Guitar $G.9G. Dig value.

· Amplofonlc Mandolin., Very Good Tone $(!.95. ' PAR. 6. Through the use of the perforated· disk or plate m the tnanner hereinbefore described, and ,through the use of the foregoing l I 116 FE.DERAL TRADE -COMMISSION DECISIONS ! Fl11dings 35F. T.C. I statements and representations regarding said perforated disk, and • others similar·thereto ·but· not herein set out in detail, and by con~ structing and finishing the interior of their:. instruments so as to have them simulate instruments equipped with said amplifying ~r resonating device, respondents represent and have represented, d.l· rectly and through implication, to members of the purchasing public that their said stringed instruments are instruments equipped with a resonating or amplifying device as set forth in paragraph 1 hereof, when such is not the fact. Respondents, fqrther, by the use of said perforated disk or plate in the manner aforesaid, place and ha-ve placed in the hands of unscrupulous dealers a means or instrumentality by which innocent purchasers may be led to believe that they · are acquiring an instrument equipped with a resonating or amplify· ing device, when such is not the fact.

PAR. 7. The stringed instruments thus manufactured and sold bY respondents are of such general design and appearance when the polished metal disks or plates are affixed to the top of the body por· tion thereof which is painted or colored as set forth in paragraph 4 hereof, that they deceive the ptirchasing public into believing that respondents' said stringed instruments are equipped with an amplify· ing or resonating device, such as set forth in paragraph 1 hereof, and because of such erroneous belief, so . induced into buying sub· stantial quantities of resp~mdents' said stringed instruments. PAR. 8. In truth and in fact the stringed instruments manufactured and sold by respondents, as aforesaid, are not and have not been equipped with an amplifying or resonating device, nor is such 11 device a part of their standard equipment.

PAR. 9. The afotesaid acts and practices of respondents as herein alleged are all to the prejudice and injury of the public and con· stitute unfair and deceptive acts and practices in commerce within the intent imd meaning of. the Federal Trade Commission Act .. REPORT, FINDINGS AS TO THE FACTS, AND ORDF.R Pursuant to the provisions of the Federal Trade Commission Act, the Federal Trade Commission, on J~nuary 7, A. D. lDH,.issued and thereafter served its complaint in this proceeding upon the respondents, John Carner, individually, and as an officer of Fretted Instrument Manufacturing Corporation and United Guitar Corpora· tion; Morris Drooks, individually,und as an officer of Fretted Instru· ment Manufacturing Corporation; Frank Sol vi no and Frank Masiello, individually, and as officers of United Guitar Corporation; Fretted Instrument Manufacturing Corporation, a corporation, and •.

FRETTED INSTRUMENT MFG. CORP., ETC., ET AL. 117 Findings lJnited Guitar Corporation, a corporation, charging th~m with the- ~se of unfair and deceptive acts and' practices in commerce, in viola- Ion of the -provisions ·of the Federal Trade Commission Act. After issuance of the complaint and the filing of a joint answer by 1 of the respondents, testimony and other e~idence in support of the n/ a legations· of the complaint were' introduced by Joseph C. Felll', attorney for the Commission, and testimony and other evidence in ~Ppo~ition to the allegations of the complaint were introduced by t f?rr1s Brooks, attorney for the respondents, before duly appointed rlal e:J~:aminers of the Commission, designated.- by it to· serve in this· Proceeding, and the 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 Commi~sion, on. the complaint, the joint answer theretp, the testimony and other ev~dence, the report of the trial examiners thereon and exceptions to· sn 1~ report, and briefs in support of and in opposition to the com- Int. And the Commission, having duly considered the matter and . elng now fully advised in the premises, finds that, this proceeding is: ln the public interest and makes this its findings as to the facts and itsconclusion drawn therefrom.

FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Fretted l11strnment Manufacturing· Corporation, is a corporation organized under the laws of the Stateof New Jersey, with its oflice and principal place of business in New-· llrk, N.J. .

. Respondent, United Guitar Corporation, is a corporation organ-· lZed under the laws of the State of New Jersey, with its office and Principal place of business in Jersey City, N.J. ·-Respondent, John Carner, _is an individual, and is president of respondent corporations.

Respondent, Morris Brooks, is an individual, and is vice president and treasurer of respondent, Fretted Instrument Manufacturing Corporation.

. Hespqnclent, Frank Solvino, is an individual, and is 'secretary of respondent, United Guitar Corporation.

nespondent, Frank Masiello, is an individual, and is treasurer of lJnited Guitar Corporation.

Respondents, John Carner and Morris Brooks, directed and con- ~rolled the policies of respondent, Fretted Instmment 1\lanufactur- ~g Corporati~n, .and respondents, ,John. Carner, Frank Solvino, and rank Masiello, directed and controlled and now direct and control, the policies of respondent, United Guitar Corporation. The jndi- 118 FEDERAL TRADE COMMISSION DE·OISIONS Findings 35F. T.C.

vidual respondents, acting in conjunction and cooperation with each Qther, inaugurated 'and carried out the unfair and ·deceptive acts' and practices hereinafter set forth. · PAR. 2. Respondent, Fretted Instrument Manufacturing Corpor~· tion, from the date of its incor~oration in November 1935 to Aprl~ 1939 was engaged in manufacturing and selling string musical instru· ments such as guitars and mandolins. This respondent discontinued ' manufacturing in April1939 and since that time has been engaged in. i liquidating its assets. · I Respondent, United Guitar Corporation, from the <late of its jncor~ 1! poration in June 1939 has been and now is engaged in the: manufactur~ and sale '()f string musical instruments, such as guitars and mandolins· ' These respondents,· during the periods herein mentioned, cause d li their products when sold, to be transported from their principal place I ()f business in the State of New Jersey to purchasers thereof located !1n various States of the. United: States. I PAR. 3. Approximately eight concerns are engaged in manufacturing, \ selling, and distributing in: commerce between and among. variottS . States of the United States what are known as amplifying or resonat· 1 ing types of guitars and mandolins. This type of instrument was II first placed on the market about the year 1928. These instruments have a virgin aluminum cone which has considerable flatness on top, the lower part of the con~ being set into a well of extension of th~ top board of the instrument, and on the upper part of the flat portioll is a bridge upon which the strings are strung. In some instances the cones are inverted. A perforated metal plate on top·of the instrument permits the amplifier to act in a diaphragm action aild also serves ns a protection to the cone. Instruments not equipped with the cone device depend entirely upon the wood for their resonance or anlplifi· cation; but where the cone device is used the sound is from 50 to 85 percent louder than that of an instrument made entirely of wood_.. PAR. 4. Respondent; Fretted Instrument Manufacturing Corpora· tion, about the year 1936, equipped its musical instruments with· a genuine cone amplifying device, pursuant to a license granted it bY the Schireson Company for the use of its patent; but because of threatened infringement litigation, ·ceased using the device in the early part of 1937. Respondents, for the purpose of increasing their sales, simulated the· genuine amplifying device described in paragraph 3 hereof by affixing to the top of the body portion of their guitars and mandolins a polished, perforated metal disc or plate, and at on8. time, to further simulate said device, painted the interior of the bod~ of their instruments with aluminum paint, which wheil seen through the perforations in the disc, hacl the appearance of the· amplifying· FRETTED INSTRUMENT MFG. CORP., ETC., ET AL. 119 Findings -cone.' This latter practice was discontinued about the time the com- Plaint herein was issued and has not been resumed. The use of the ~etul disc or plate gi~es to respondents' instruments a metallic ring, ut. neither the volume nor resonance of the tone is increased thereby, as 1s the case when the cone is used. Respondents' musical instrulnents are not resonating and amplifying instruments as these terms are understood in the musical trade and among music-loving people. 'these terms, when appli~d to musical instruments, mean ircreasing the volume of the tone.

· There is a preference· on the part of a portion of the purchasing- PUblic £or guitars and mandolins equipped with the cone amplifying ~e\'ice. The average person:n, in viewing. the instrument, would not . e able to distinguish between a genuine resonating or amplifying lnstrument and one of respondents' instruments decorated with a Polished perforated metal disc or plate .

. ':PAn. 5. Respondents, by simulating the amplifying device described· ln Paragraph 3 hereof, have placed in the hands of dealers to whom they have sold their products the means or instrumentality by which the purchasing public may be led to believe that in pur~hasing respondents' instruments they are acquiring instruments equipped with a resonating or amplifying device, when such is not the fact. h A. number of dealers to whom respondent's have sold their products ave, by means of advertisements placed in musical magazines of general circulation, represented directly or indirectly that respondents' l>roducts are equipped with a resonating or amplifying device. Typi-· ea} of such advertisements are the following: · :No, 248. The Guitar which has created an all-time sales record. It has outsold ll.ll other guitars and continued li "best seller." Nickel-plated "Resonator" orna- , lnent adds resonance to i-ts deep tone and richness to lts appearance. :Nickel-plated "Resonator" ornament adds resonance to the tone of this ManlloUn and "pep" to its appearance.

:Nickel-plated "Resonator" ornament adds resonance to its deep tone. '.rhe melofonic tone disk built on the top of the Guitar is heavily llicl•el-plntcd lind 'polished, and produces a tone of greater volume and remarkable quality. '.rhe melofonlc Mandolin you see pictured at the right has n sparkling tone of tremendous power "' "' "'· The nickel-plated tone cover helps to produce a btill!ant tone. , The melofonic tone disk built on the top of the Guitar is heavily nlcltel-plated lind polished and produces• a tone0 of greater volume and remarkable quality. A personal memorandum book carried by one of the salesmen of respondent, Fretted Instrument Manufacturing Corporation, concerning one of its guitars, contained among others, the following entry: . ::New metal 9" resonator top only "' • • imitation of amplifying guitar. 120 FEDERAL TRADE COMMISSION DFJOISIONS Order 35F.T.C· CONCLUSION . The acts and practices of the respondents as·herein found are all to the prejudice and injury of the public, and constitute unfair and de· ceptive 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 Commis· sion upon the complaint of the Commission·, the joint answer of t~e respondents, testimony and other evidence in support of and in opposl· tion to the allegations of the complaint introduced before duly. ap· pointed trial examiners of the Commission designated by it to serve in this proceeding, the report of the trial examiners and exceptions thereto, and briefs in support of and in opposition to the compiaint, and the Commission having made its findings as to the facts and its conclusion that respondents have violated the provisions of the Federal Trade. Commission Act.

It is ordered, That the respondents, Fretted Instrument ·Manufac· turing Corporation, a corporation, United Guitar Corporation, ll corporation, their officers, directors, representatives, agents, and em· ployees, respondents, John Carner, individually, and as an officer of respondent corporations; Morris Brooks, individually, and as an ofli· cer of responuent, Fretted Instrument Manufacturing Corporation; Frank Solvino and Frank Masiello, individually, and as officers of respondent, United Guitar Corporation, directly or through any cor· porate or other device, in connection with the offering for sale, sale and distribution of guitars and mandolins, or other stringed musical instruments in commerce as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Simulating genuine resonating or amplifying m~s.ical instru· ments Ly equippin,';;' their products with polished perforated disks or plates.

· 2. Simulating genuine resonating or amplifying musical instru· ments by painting the inside of their products with aluminum paint, or treating it in any other manner so as to give it the. appearance of being equipped with an aluminum cone. • 3. Representing directly or by implication that their products, or any of thein, are equipped with a. resonating or amplifying device. It is further ordered, That the respondents shall, within 60 days after service. upon them of this order, file 'with the Commission ll report in writii1g setting forth in detail the manner and form i:n which they have complied with this order.

THE BIBLE INSTITUTE., E.TC., ET AL. 121 Syllabus