Lifetime, Inc.

Text (OCR of the scan at left; may contain errors)

IN THE ~fatter OF LIFETI~I:EJ, INC., ET AL.

ORDER ETC., IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE CO~I:i\IISSION ACT Docket 7616. Complaint, Oct.. 19, 1959-Decision, Dec. 1961 Order requiring two associated companies engaged in home construction and improvement in Philadelphia-acting as a sales and financing organization and sub-contracting construction and installation work to other partiescease. using bait advertising in newspapers and other publications to get leads to prospects, which made false representations as to the costs and quality of their services and materials, guarantees, their connections with well-known concerns, and professional status of their salesmen; and to cease securing purchasers' signa Lures to negotiable promissory notes deceptively.

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 Lifetime, Inc. , a corporation, Youngst.own I-Iomes. Inc., a corporation, and Sam Leonard and Samuel :l\1oskowitz, individually and as officers of each of said corporations, hereinafter referred to as respondents, have violated the provisions 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 compbjnt, stating its charges in that respect as follows:

PARAGR"\PI-I 1. Respondent Lifetime, Inc., is a corporation organized, existing and doing business under and by virtue of the laws , is a 'corpora-of the State of Pennsylvania. Youngstown I-Iomes, Inc. virtue oftion organized, existing and doing business under and by the laws of the State of New ~Tersey. Respondents Sam Leonard and Samuel :Moskowitz are individuals and are president and secretarytreasurer, respectively, of each of the said corporate respondents. Said corporate respondents are \\holly~mvIlec1 by the said individual Complaint 59 F.

respondents. The said individual respondents formulate, direct and control the acts, practices and policies of each of the said corporate respondents. The office and principal place of business of the respondents is located at 3931 North Broad Street, Philadelphia 40 Pennsylvania.

PAR. 2. Respondents are now, and for several ye.ars last past, have been engaged in the advertising, offering for sale: sale and distribution and the installation and construction of houses, garages, house. building materials, including stone fronts, roofs, bathrooms, heating equipment and basement water-r proofing.

In the course and conduct of their businesses, said respondents cause their said products, when sold, to be shipped and transported from, their place of business in the State of Pennsylvania to purchasers thereof located in the various other states of the United States and in the District of Columbia. Said respondents maintain, and at all tunes mentioned herein have maintained, a substantial course of trade in said products, in commerce, between and among the various states of the United States and in the District. of Columbia. Advertisements offering the aforesaid products for sale are contained in newspapers and other publications which are shipped and transported from the State of Pennsylvania to various other states of the United States, including the District of Columbia. PAll. 3. Respondents' method of doing business is to advertise their aforesaid products and services for sale in newspapers and other publications. Certain of their advertisements are tmder respondents' own name. Certain other advertisements are carried under the name of Youngstown Industries. Youngstown Industries, Inc., is a corporation located at 8116 Old York Road, Philadelphia, Pennsylvania, a,.nd is wholly separate and a-part from the respondents. Persons responding to the aforesaid a.advertisements are contacted by respondents' salesmen. Such salesmen show literature to the prospective purchasers and make numerous oral representations respecting the afore.c;aid products and services offered by re.~pondents. Said salesmen induce purchasers to sign c.contracts and enter into various financial arrangements with the respondents. Respondents act largely as a sales and financing organization. For the most part, respondents enter into sub-contracts and agreements with other parties to perform such construction and installation work as may be required. At the time of the sale purchasers are induced to execute promissory notes and other documents necessary to finance the transaction. Said promissory notes are then sold by respondents to various financial institutions. PAR. 4. In the course and conduct of their businesses, as aforesaid, and for the purpose of soliciting the sale of the aforesaid prod- . . . . . . . . . . ... .. . LIFETIME , INC. , ET AL. 1233 1231 Complaint nets and services, respondents make numerous representations in their aforesaid advertising and by the oral statements of their salesmen respecting prices, guarantees, business associations and affiliations status of salesman, and the composition, characteristics and quality of the aforesaid products and services.

Typieal and illustrative of the aforesaid acts and practices, but not all inc.lusive thereof, are the following:

Stop wet, damp, leaking basements. Basements made dry without digging. . . Basement sealed from outside under pressure Written guarantee with p\"try job. . Jobs done low as $-14.00.

. Youngstown Homes Completely erected Including Foundations . Complete shell homes erected on your lot for as low as $lfJfJ5.00! Beautiful modern bathroom. . . Complete heating system. . . Stunning ';hostess Kitchen Cabinets and Sinks. (Pictured in connection therewith is a house of ample proporUons with a divided bathroom, heating plant in large basement, ample kitchen with eating space, large picture window and other characteristics imlieating that the house is of substantial size. Youngstown one and two-car garages. . . ~300 deli,ered. (Pictured in connection tllere'lyith is a large. completely erected garage. Youngstown. . . glass-lined roofing guaranteed to out last any other roofing materia I.

Y oung~town glass-lined roofing. . . $66.00. (Pictured in connection therewith is roofing being applied to an entire house top. Youngstown stone fa~hioned front section . . . sale price ~ Act now. . . for :-:ingle, or row home. .J obs done 10\"\' as $44.00. (Pictured in connection therewith is the entire front of a stone covered IHJuse. Home improvements.. . )lodern hathroom Jobs done low as $-1-1, (Pictured in connection therewith is a completely installed bathroom. Genuine Youngstown Guaranteed Automatic Heat, Gas, I"orced Air, delivered $13D.00 complete with all equipment. $50,00 ca!'Jh trade-in on your old furnace. (Pi,et.ured in eol1l1ection therewith is a gas fired furnace with hot air duets. Guaranteed. 'Ve at YOlUlgstown Industries unconditiom111y and unequivocally ;-narantee in writing first class cr~ftsmanship and materials. "-e further agree to furnish especially trained mechanics to fIssure proper installation. Absolute ~n tisrnction shall be yours.

STOKE Fashion Front Section. Save up to 50% over ordinary stone. Youngstown smashes prices! . . . Youngstown Industries. 21st at Godfrey \venue, Philadelphia 38, Pa.

Xew home.." for 'Old through the magic of Youngstown s products! . . . Youngstown Industrie-s an American institution, 11200 Roosevelt Blvd., Phila. , Penn..!. respondents: salesmen in the manner aforesaiel have shmyn literature to prospective purchasers and maele oral representations containing the. foregoing and other statements. Saiel salesmen hare a Iso stated that they .were sales managers, owners of Y oungstmYIL engineers anel presented themselves in various other c.apac.ities other than ns sa lesmeIl.

\I~. 5. Through the use of the foregoing statements and the pictorial repre~entntions made in connection there,,-ith, and others of ~imilar impOli, and meaning, but not specificalh- set out herein, made 693-490--64---- Complaint 59 F.

by respondents or their representatives, agents or employees in advertising and promotional literature and in oral presentations to prospective purchasers, respondents have represented and do now represent directly or indirectly~ to a substantial portion of the purchasing public: (a) That basements are made water- proof for $44. , that large and substantial shell houses of the kind adequate to aceommodate a threecompaltmented bathroom, kitchen with eating space, large picture window and basement are. sold for $1995. that completely erected garages are sold for $300, that glass-lined roofs are installed for $66. that genuine stone fronts are installed for $44.00 or 500/0 of the cost of stone\ that complete bathrooms are installed for $44.00 and that gas foI'ee(1 air furnaces complete with ducts and all equipment necessary for the operation i.hereof are sold for $139.00; (b) That the aforesn lc1 products nncl services arc unconditionally and unequi,-oea.lly guaranteed:

(c) That. respondents nre n. pl1Tt of or amlinte.d with YoungstowJI Kit.chens~ a division of )..mericnn R.adiator and Standard Sanitary Corporation, ;'520 South Ellsworth A venue, Salem~ Ohio, and that they are a part of or affiliated with Youngstown Industries, Inc., of Philadelphia, Pennsylvania.

(d) That respondents~ salesmen are sales managers, owners of Yonngstown Kitehens, a division of American Radiator and Standard Sanitary Corporation, engineers or have other business or professional status different from that of salesman;

( e) That the so-called glass-lined roofing will outlast any other kind of roofing material;

(f) That the so-called "stone fashion front" is genuine stone; (g) That damp and leaking base.ments will be made dry without digging;

(h) That all of the aforesaid products sold and services performed by respondents would be of the first grade and the highest quality. PAR. 6. The foregoing representations are false, misleading and deceptive. In truth and in fad:

(a) R.respondents do not and will not make a. damp and leaking basement dry for $44, do not and will not sell a large and substantial f3hell home of the kind hereinabove described for $1995, do not and will not completely erect a. garage for $300, do not and will not install a. glass-line,d roof for $66, do not and will not install a genuine stone front or a simulated stone front on a. house fer $44 or for 50% of the cost of natural stone, do not and will not install a complete bathroom including fixture.s ~ for $44 and do not and will not sell :1. gas forced air furnace complete with ducts and all equipment necessary for the operation thereof for $139. The aforesaid price amounts and other LIFETIME , INC. , ET AL. 1235 1231 Complaint price amounts not specifically set out herein were made by respond: ents for the purpose of inducing prospective purchfi.sers to make inquiries respecting the said goods and services offered for sale. Upon contacting such prospective purchasers respondents, their salesmen agents or representatives then undertake to sell such persons other and more expensive products and services.

(b) Respondents' aforesaid products and services are not unconditionally guaranteed. Such guarantees as may be given by respondents are subject to numerous restrictions with respect to til11. , material and services.

( c) Respondents are not a part of or in any manner affiliated with Youngstown IGtchens, a division of American Radiator and Standard Sanitary Corporation, 520 South Ellsworth A ve.nue., Salem, Ohio, nor are they a part of Youngstown Industries, Inc. , of Philadelphia Pennsylvania.

In truth and in fact, respondents have a kind of joint. advertising arrangement with the said Youngstown Industries, Inc. of Philadelphia, wherein Youngstown Industries, Inc. specializes in one line house building materials and repairs and respondents specialize in another type and kind of house building materials and repairs and construction.

(d) Respondents' salesmen are not sales managers or owners Youngstown Kitchens or engineers, nor do they occupy any other business or professional status other than that of salesman. (e) Hespondents' glass- lined roofing will not outlast any othet kind of roofing materials.

(f) The so-called stone offered for sale by respondents is not genuine stone in its natural state.

(g) H.respondents are unable to make all basements dry without digging.

(h) All of the goods sold and services performed by respondents are not of first-class and high quality. l\fany of the products sold and the. services performed by the respondents are deficient and defech\"e. For example, roofs and stone fronts leaked, bathroom fixtures were not properly installed, heating units did not fldequntely perform and various other def-iciencies and defects chnraeteiized respondents said products and services.

PAR. 7. Hespondents' salesmen, in the manner aforesaid, have represented and implied thflt respondents did their own financing, and that. respondents held the promissory notes executed by purchaser or that purchasers \were signing a duplicate cop:v of the contract when in fa.ct they \"ere signing a. negotiable promissory note. and in other ways induced such purchasers without knowledge to sign negotiable promis- Decision 59 F.

501')' notes providing for the payment of financing charges in amounts not agreed to by them. Subsequent to the receipt of said promissory notes, respondents ha ye transferred said notes to various purchasers "ho take and hold said notes as bona fide holders for value without notice and demand payment thereof free from the agreements and obligations existing bet"e€Il respondents and said purchasers. \R. 8. Youngstown Kitchens is a division of American Radiator nd Standard Sanitary Corporation, 520 Ellsworth .Avenue, Salem Ohio. The products of the said YoungsU),yn Kitchens are nationally :\chertised and widely sold, P.-\R. 9. Respondents, in the course and conduct of their business as aforesaid, are in substantial competition in commerce with other corporations and with individuals, partnerships and others engaged in the sale and distribution of houses, garages and building materials including stone fronts, roofs, bathrooms, heating equipment. and basement water proofing.

P AI:, 10. The use by respondents of the foregoing false, misleading and deceptive representations and statements has had and now has the tendency and capacity to mislead and deceive the purchasing public. into the erroneous and mistaken belief that such representations and statements "'ere and are true, and into the purchase of substantial quantities of respondents' said products and services because of sneh elToneous and mistaken beliefs. As a result. thereof, trade. has been unfairly diverted and is now being diverted to respondents from their eompetitors in commerce and substantial injury has been and is bei ng done to competition in commerce.

PAR. 11. The aforesaid ac.ts and practices of respondents, as herein alleged, are all to the prejudice and injury of the public and c.onstitnte unfair methods of competition and unfair and deceptive acts and practices, in c.ommeree, wi th in the intent and meaning of the Federal Trade Commission Act.

jlh' , Terral A. ioNian for the Commission. d:: FJ'(Inkel. :117'. Nathan L. Po8nel' of Foil), Rothschild. O~H7';en Philadelphia, Pa., fol' respondents.

IXITL\L DECISION BY lL\nny R. I-hNKES. I-IEATaSG EX.\:\IIXET: Respondents are charged with violation of the Federal Trade Commission Act by llsing false, misleading, n.nd deceptive representations sale of houses, garages, and and statements in the solicitation and bu ilding materials including stone fronts, roofs, bathrooms, heating filed answer~ e.qnipment. and basement ,,-aterproofing. Respondents reqne.sting dismissal of the complaint. I-Iearings were held in Phila- , , ,, LIFETIME , INC. , ET AL. 1237 1231 Findings delphia., Pmll1sy1vania, and Cleveland, Ohio, follo\ving which proposed findings and conclusions were submitted by both counsel. The hearing exam.iner has given consideration to the proposed findings and conclusions, and all findings of fact and conclusions of law proposed by the parties not hereinafter found or eonclnded are here, with rejected.

FINDI"KGS OF FACT 1. Respondent Lifetime, Inc., is n. corporation organized, existing and doing business under and by virtue of the laws of the State Pennsylvania. Respondent Youngstown Homes, Inc., is a eOl'pOl'nbon organized, existing and doing bl1sines under and by virtue of the laws of the State of New Jersey. The office and principal plaee business of respondent Lifetime, Inc., was formerly located at. 3931 North Broad Street, Philadelphia, Pennsylvania, and was later moved to 6701 North Broad Street, Philadelphia, Pennsylvania. 2. Respondents Sam Leonard and Samuel ~loskO\vit.z are individna Is and are president a,nd secretary-treasurer, respectively, of e.'lch of the said corporate respondents. Each of the individual respondents own 50% of the stock of each of the corporate respondents. The, said individual respondents formulate, direct and control the acts, practices and policies of each of the said corporate respondents including the nets, practices and policies hereinafter found to have been engaged in by each of the said corporate respondents. The office and principal place of business of the individual respondents is the same as thntof the corporate respondents.

3. Respondents are nm" , and for several years last. past ha,.e been engaged in the advertising, offering for sale, sale and distribution and in the insta1Jation and constTllctjon of houses, garages, house building materials, including simulated stone. fronts, roofs, bathrooms heating equipment, and basement waterproofing. In the course, and conduct of their business sni(1 respondents cause their said products hen sold, to be shipped and transported from their place of business to purchasers thereof located in the yariol1s other states of the 17nitec1 States. Said respondentsmn.intain, and at all times mentioned herein have, maintained n sllbstnntjaJ course of trade jn sa.id products, jn commerce, behyeen and among the various states of the United Statr:=;.

Advertisements offering the aforesajd products for sale are coj)tained in newspapers f\J!d other publications ",hie)) are. shipped and trnnsported from the State of Pennsylvania to yariOllS other states the Unjted States. Said newspaper ach-ertisements have jndnced persons residing in states other than Pennsyh-ania to purchase the aforesaid goods and services oft' ereel for sale by respondents. . . . . . . . .. .

Findings 59 F.

4. Respondents method of doing.business is to advertise their aforesaid products and services for sale in newspapers and other publications. Certain of their advertisements are under respondents' own names. Certain other advertisements are carried under the name of Youngstown Industries. Youngstowl1 Industries, Inc., is a corporation located at 8116 Old York Road, Philadelphia, Penns~vlvania, and is wholly separate and apart from respondents. Persons responding to the aforesaid advertisements are contacted by respondents' salesmen. Such salesmen show literature to the prospective purchasers and make numerous oral representations respecting the aforesaid products and. services offered by. the respondents. Said salesmen induce purchasers to sign contracts and enter into various financial arrangements with the respondents.

Respondents act largely as a sales and financing organization. For the most part, respondents enter into subcontracts and agreements with other parties to per~6rm such construction and installation work as ma.y be required. At the time of the sales, purchasers are induced to execute promissory notes and other documents necessary to finance the transaction. Said l)romissory notes are then sold by respondents to various financial institutions.

5. In the course and conduct or their businesses, as aforesaid, and for the purpose of soliciting the sale of the aforesaid products and serviee. , respondents make numerous representations in their aforesaid adve.rtising and by the oral statements of their salesmen respecting prices, guarantees, business associations and affiliations, status of salesmen, and the composition, characteristics and quality of the aforesaid products and Typical and illustrativeservices.of the aforesaid acts and pra~tices, but not all inclusive thereof, are the following:

a. Stop wet, damp, leaking basements. Basements made dry without digging Basement sealed from outside under pressure. . . "\Written guarantee with every job. Jobs done low as $44.00. b. . . . Youngstown Homes. . . "Completely erected. . . Including Foundations . Complete shell homes erected on your lot for as low as $1995.00! Beautiful modern bathroom... Complete heating system. . Stunning hostess" Kitchen Cabinets and Sinks, (Pictured in connection therewith is a house with a divided bathroom, heating plant in large basement. ample kitchen with eating space, large picture window and other characteristics indicating that the house is not of minimal size.

c. YoungsttfWll (me and two-car g;nages . , , ~300 and up deli,ered. (pjctnred jn connection therewith is a large, completely erected double-car garage. d. Youngstown . , . gl:Jss-lined roofing guaranteed to outlast any other roofing m8 teria e. Youngstown glass-lined roofing. . . $66.00. (Pictured in connection therewith 'is roofing being applied to an entire house top. LIFETIME, INC., ET AL. 1239 1231 Findings f. Youngstown STONE fashion front section. . . sale price! Act now. . . for single, or row home. Jobs done low fls $44.00. (Pictured in connection therewith is the entire front of a stone-covered house. g. Home improvements. . . Modern bathroom. . . Jobs done low as $44. (Pictured in conection therewith is a completely installed bathroom. h. Genuine Youngstown Guaranteed Automatic Beat, Gas, Forced Air, de. Jivered $139.00 complete with all equipment. $50.00 cash trade-in on your old furnace. (Pictured in connection therewith is a gas-fired furnace with hot air ducts. ) i. Guarantee. We at Youngstown Industries unconditionally and unequivocally guarantee in writing first class craftsmans.hip and materials. We further agree to furnish especially trained mechanics to assure proper installation. Absolute satisfaction shall be yours.

.i. STONE Fashion Front Section. Save up to 500/0 over ordinary stone. k. Youngstown smashes prices! . . . Youngstown Industl"'ies, 21st at Godfrey A venue, Philadelphia 38, Pa.

1. New homes for old through. the magic of Youngstown s products! . . . Youngstown Industries an American institution, 1'1200 Roosevelt Blvd., Phila. Penna.

Respondents' salesmen in the mallJ1er aforesaid have shown literature to prospective purchasers and made oral representations containing the foregoing and other statements. Said salesmen have also stated that they were sa.1es managers or owners of Youngstown, and presented themselves in various other capacities other than as salesmen. 6. Through the use of the foregoing statements and the pictorial representations made in connection therewith, and others of similar import and meaning, but not specifically set out herein made by respondents or their representatives, agents or employees in advertising and promotional literature and in oral presentations to prospective purchasers, respondents have represented, directly or indirectly, to a substantial portion of the purchasing public: (a) that all basements are made waterproof for $44. 00; that large and substantial shell houses are the kind adequate to accommodate a three compartmented bathroom, kitchen with eating space, large picture. window and basement and are sold for $1 995.00; that completely erected garages are sold for $300.00; that glass-lined roofs are installed for $66.00; that genuine. stone fronts are installed for $44. or 50% of the cost of stone; that complete bathrooms fire installed for $44.00; and that gas-fired air furnnces, comple,te with ducts and all other equipment necessary for the operation thereof are sold for $139.00 ;

(b) that the aforesaid products and services are 11l1conc1itional1y and uneqnivoca.Ily guara.nte.ed;

(c) that respondents are a part of or affiliated with Youngstown Kitchens, a division of American Radiator and Standard Sanitary Corporation, 520 South EIJsworth A venue, Salem, Ohio, and that they Findings 59 F.

are a part of or affiliated "ith Youngstown Industries, Inc., Phila(1elphia, Pennsylvania;

. (d) that respondents: salesmen are sales managers or owners of Y Olwgstown Kitchens, a division of American Radiator and Standard Sanitary Corporation, sa.Iesmen for Youngstown Industries, Inc., or have other business or professional status different from that of salesmen;

(e) that. the so-called glass lined roofing will outlast any other kind of roofing material;

(f) that the so-caned "STO~TE fashion front'~ is genuine stone; (g) that damp and leaking basements win be made dry without digging;

(h) that all of the aforesaid products sold and services performed by respondents are of first class and highest quality; 7. The foregoing representations are false, misleading, and deceptive. In truth and in fact:

(a) Respondents do not and will not make damp and leaking basements dry for $44, do not and will not sell a. large. and substantial shell home of the kind hereinabove described for $1995, do not and will not complet€ly erect a garage for $300, do not and will not install a glass-lined roof for $66, do not and will not install a genuine stone front or a simulated stone front on a. house for $44, do not and win not install a complete bathroom, including fixtures, for $44, and do not. and win not sell a gas-fired air furnace complete with duets ami all equipment necessary for the operation thereof for $139. The aforesaid price amounts and other price amounts not specifically set out herein were made by respondents for the purpose of inducing prospeetive purchasers to make inquiries respecting the said goods and services offered for sa.1e. Upon eontaeting such prospective purchasers, respondents, their salesmen, agents or representa.t.ives then undertake to sell sHeh persons ot her and more expensive products and services. (b) Responde.nts' aforesaid products and services are not. 1111C011clitional1y gua.ranteed. Such guara.ntees as may be given by respondents are subject to numerous restrictions with respect to time, materia I :1nd services.

(c.) Respondents are. not a part of or in any manner affiliated with Youngstown Kitchens. a division of .American Hadiator and 81:111(1ard Sanitary Corporation, 520 South El1sworth Avenue, Salem. Ohio nor are. they a part. of Youngstown Industries, Inc., of Philadelphia Pennsylvania.

In truth and in fact. respondents have a kind of joint ad,-ertising arrangement with the Yonngstown Industries, Inc., of PhiJac1elphin. wherein Youngstown Industries, Inc., specializes in one line, of hollse LIFETIME , INC. , ET AL. 1241 1231 Findings building materials and repairs and respondents specialize in another type a.nd kind of house building materials and repairs and construction.

( d) Respondents' salesmen are not sales managers or owners of Youngstown Kitchens, nor do they occupy any other business or professional status other than that of salesman. ( e) Respondents" glass-lined roofing will not outlast all other kinds of roofing materials.

(f) The so-called stone offered for sale by respondents is notgenuine stone in its natural state.

(g) Respondents are unable to make all basements dry without digging.

(h) Not all of the goods sold and services performed by respondents are of first-class quality. :Many of the products sold and the services performed by the respondents are deficient and defective. For example, roofs and stone fronts leaked, bathroom fixtures were not properly installed, heating units did not adequately perform, and various other deficiencies and defects characterized respondents' said products and services.

8. Respondents falsely represented that they did their own financing and held the promissory notes executed by purchasers and that the purchasers were signing the contract or a duplicate copy thereof whe.n in fact they were signing a. prom.issory note; and in other ,'\ays induced the purchasers without knowledge to sign negotiable promissory note.s which provided for the payment of financing charge.s in amounts and on conditions not agreed to by them. 9. Youngstown Kitchens is a division of .A.--american Radiator and Standard Sanitary Corporation, 520' Ellsworth Ave., Salem, Ohio. The products of the said Youngstown Kitchen are nationally advert isecl and widely sold.

10. Re,spondents, in the course and conduct of their business, as aforesaid, are in substantial competition' in commerce with other corporatjons and with jndividuals, partnerships, and others engaged in the sale and distribution of houses, garages and building materials. including simulated stone fronts, roofs, bathrooms, heating equipment. :Ulcl bnse,ment ,,-aterproofing.

11. The use by respondents of the foregoing false, misleading and deceptive representations and statements has had and now has the tendency and eapacjty to mislead and deceive the purcha-sing public into the erroneous and mistaken belief that such representatjons and statements "-ere and are true, and into the purchase of substantial q nantit.ies of respondents' said products and services because of such erroneous and mistaken belief. As a result thereof, trade has been unfairly diverted and is now being diverted to respondents from their .

Discussion 59 F.

competitors in commerce and substantial injury has been and is being done to competition in commerce.

DISCUSSION Respondent, Lifetime,- Inc., urges the dismissal of the complaint arguing that the charges have not been supported by evidence. In addition, it is argued that ex 14 was admitted into evidence enoneously; that the testimony of certain witnesses was improperly permitted concerning the similarity of the advertisements seen by them with those received in evidence and concerning the terms of a written contract without production of the contract.. There is no dispute that the questioned advertisements were made by respondent Lifetime, Inc. The corporation instead argues that these advertisements were not deceptive nor were they untrue. The advertisement with respect to "basements made dry" contains no limiting qualification and, if read literally, must be construed to be an advertise.Inent for the water-proofing of all basements, not just some. The advertisement of the shell home might be open to some difference in interpretation were it not for the illustration accompanying the advertisement, showing details which are usually associated with a house of substantial size. Similarly, the illustrations contained in the advertisements would lead the reader to assume that a double-car garage could be had, installed, for $300 a complete roofing job for $66, and an entire stone front for $44. The pictured bathroom jobs for $44 are c1earlycomplete bathrooms if one is to place any reliance on the illustration acompanying that advertisement; and the $139 furnace "delivered complete" must be taken to include the hot air ducts which are clearly shown in the illustration for that advertisement. The use of "Youngstown Industries" in the advertisement is more tha.n adequa,te as a representation that the products are those of YoungstoWll Industries. As respects the guarantee" the plain language requires no further explan~ltion.

The consumer evidence adduced fully supports the meanings found for these advertisements. Appearance and general impressions are the governing eri teri a, and not the fine spun distinctions and argu- Y. FTC 186 F.ments that may be made in excuse (P. Lo'l'ilZa'i'CZ CO. 2d 52: CA-4 ~ 19:30 (5 S. & D. 210J). ~or does it matter that many the witnesses ,were finally persuaded to c.ontraet for one or more of the respondents: products are. services at. a pric.e. ,yell in excess of the ach-eTtisec1 price, nor that they have been well satisfied with the results at the higher price. The important thing is that they we.re under the imnres8ion. which ,Tas Q."iH'n bv the advertisements and the. statement~ LIFETIME , INC., ET AL. 1243 1231 Discussion the respondents' salesmen, that the products and services of the responcknts were obtainable and at the advertised prices. The only issue that must be decided is . whether, in fact., the pl oducts and services so advertised were jlctually obtainable and at the advertised prices. At the outset it would be advisable to observe that actual.l deception of the public need not be shown in Federal Trade ComJnission proceedings. (See Gharrles of the Ritz Disi. Gorp. v. Fede1' al Trade OomIni8,~';un 1+3 F. 2d 67G , c..: ~ 194:1: (4 S. &: D. :226J). Respondent Leonard a.c1mitted that not all ,yaJls could be waterproofed for the advertised price of $44. No such qualifying conditions were contained or suggested in the advertisement. In a tabulation of waterproofing done by respondents be.t.wenOctobe.r 1, 1957 and April 30, 1958, there was one job for $150; all others ran from $500 to $1 000.

As respects the shell home advertised for $1 995, rsepondent LeonarcI made it quite clear that the dimensions of the house obtainable at that price provided living space. 1+ feet ,,-ide by 20 feet long. That area is entirely incompatible with the advertised illustration showing a eompartmented bathroom, a kitchen with breakfast area and large picture windo"\\'. l\1moreover, although the illustrated advertisement shows a furnace in a basement, the $1 995 shell home does not include a basement. During the period covered by the tabulation, one house. was sold for $4 700; all the. othet 61 houses sold during that period ranged in price from $5 000 to over $9 000. As respects the garage, respondent. Leonard admitted quite freely that. the $300 price was only for the lumber delivered to the premises, not for any installed gn,rage. Again, during the tabulation period 24 garages were sold, the lowest pric.e of "which "as over 000 and the higllest price was over $2000. The advertised price of the roofing job which is illustrated appears to be the price for an entire roofing job. It is quite clear that the $66 price was completely fictitious. One witness was told by respondents salesman that she could not get the work done for the. n clyertisec1 price; instead her roofing job was $688. Another customer testifipcl that the respondents' salesman told her the stated price of the roofing was just advertising. During the period covered by the tahnlation~ 58 contracts for roofing were involved; one was for $97, a ~econd for $100 and all of the others ranged in price from $175 to $700. It is quite clear that. the respondents had no intention of proyic1ing Rn entire stone front for anything like the ac1verbsing price of $44. Respondent Leonard testified that for that price only a. cloorwny areh or window trim would be done. One witness who thought that the advertisement meant she would have an entire stone front for 849 Discussion 59 F.

(another advertised price) was told by the respondents' salesman that he didn t want to talk about the $49 job. During the tabulated period there were only eight stone jobs, but the lowest price was $387 and the highest price almost $4 000.

Respondent Leonard testified that the price of $44, represented by the respondents to be the price for a. complete bathroom, would actually cover only a half day s work to do odd jobs and was a minimum charge. The $44, testified l\1:r. Leonard, did not cover the cost of providing the fixtures and installation of a bathroom. During the period covered by the tabulation, there were. 28 c.contracts invoh-inga. bathroom, the price ranging from a low of $617 to a high of O\' 600.

As respects the advertised pric.e of $139 for a heating plant, :Mr. I.Jeonard testified that that price was only an arbitrary figure "which did not cover any particular article of merchandise. Customers who dealt with the respondents under the impression that the heating plant was available at the advertised price, finally contracted for the service at a much higher figure. During the period covered by the tabulation there were 91 heating contracts, six of which were for $179, $190, $195 $235, $259, and $295. All the others ranged upward in price, to a maximum of over $1 800. There were none at the advertised price. Although the respondents' guarantees "-ere advertised to be uncond itional and unequivocal, the respondents' ans"- er admits that the products are not nneonditionally guarantee.ed and are subject to certain limitations in time and amount. The standard form of contract used by respondents states:

Contractor guarantees that all materials furnished by it will be of stanclnrd Quality, free from defects. and will be installed or applied in a good and workmanlike manner for a period of one year from date of installation. The linbiJitJ' of the contractor for defective material or installation under this guarantee is hereby limiterl to the replacement or correction of said defective material and/or installation. and no other claims or demnnds 'whntsoever shall be made upon or required to he allowed by the contractor. Respondent Leonard testified that the advertised expression "guaranteed heat" meant a guarantee of one year on the furnace and a guarantee of five years on the controls. lie also testified that the roofing guarantee could be any,,-here from one to 20 years depending upon ,,-hat the salesman chose, to insert in the contract. As for ,,-afterproofing, the guarantee varied from one to Jive years, again depending upon the salesman. In response to an inquiry from a customer as to the meaning of "lifetime guarantee :' respondent Lifetime, Inc. stated it. "eovere.d one year free sen-ice on all equipment, controls and motors fully guaranteed for one. year and balance of equipment guaranteed for fiye. years. :: In other contracts there were no written 01' printed guarantees ,,"whatsoever. The repre.'3entation of an unc.ond LIFETIME , INC. , ET AL. 1245 1231 Discussion tional and unequivocal guarant~e falls in the realm of pure fiction in the light of these variations in guarantees, where in fact there were anyguarantees whatever. The advertisements of respondents appearing with the name Youngstown Industries" and the representations by various of the respondents' salesman of a. purported conne~tion with Youngstown Industries are in fact, and admittedly so, entirely untrue. The same is true of the representations by the respondents' salesmen that they are sales managers or owners of Youngstown Kitchens. The representations c.oncerning the lasting qualities of the glasslined roofing are admittedly incorrect. Respondent Leonard stated that this representation mea:nt only that suc.h glass-Jineclroofing would outlast ordinary paper built-up roofing. Inasmuch as there are many other types of roofing such as slate, copper, c.composition, etc.., which this glass-lined roofing would not outlast, the advertised representa- 60n of outlasting any other roofing is patently false. An expert in the roofing industry testified withollt contradiction that the product is maintenance mat~rial which must be renewed every five to seven yea,rs. expec.tanc.y than five to seven yearsRoofing having a greater life would obviously outlast the glass-lined roofing. As respects the representation c.oncerning the stone fronts, it is admitted that the stone offered for sale by respondents is not. genuine stone in its natural state.

As respects the ability of respondents to make a11 basements dry without digging, respondent Leonard admitted that some basements would require digging.

FinaDy, as respects the quality of the work done by the respondents the evidence in this case is most persuasive that the goods and services sold by the respondents were not always first-class quality, as advertised. 'Vitness after witness testified about leaking roofs, defective furnaces, cracking joints, incomplete work, improper plumbing, loose knot holes in the lumber, leaking basement walls, etc. In sum, it is obvious from the testimony of the respondents themselves, as well as from the customer witnesses, that the respondents had no intention of selling the advertised goods and services at the stated prices. The evidence of over $600 000 sales for the period between October 1957 and April 1958 together with the te.'3timony of various witnesses concerning their inability to obtain the advertised product at the adver6sed price and the admissions of the respondents themselves, make it clear that the advertisements were just bait for he credulous and unsuspecting. The calloused statements of some of the salesmen that this was just "advertising" was undoubtedly the literal truth. The advertised representations, whether of pric.e, per- Discussion 59 F.

formance" quality, guarantee, or company affiliation, were Jalse, lnis-leading, and deceptive. The same is true of the respondents' representations . concerning financing. 1.iany customers of the respondents testified that they were completely unaware that they had signed a promissory note in connection with their purchase from the respondents. . This is understandable inasmuch as the customer copies of the contracts contained no copy of the promissory note which was found only on the original retained by the respondents. Statements made by some of the re- :spondents' salesmen represented that the responde.nts did their own ::financing and extended the credit necessary to the customer. This was confirmed by the experie.nce of some of the customers who found to their surprise t,hat they had to deal with a bank when they desired to make full cash payments.

'With the findings of unfair practices as described above, it follows logically that there has been injury to the public anclloss of business to competitors (Federal T1Yt.de Co771/lnission v. Raladam,. Company, 316 S. 149, 152 1941 (3 S. & D. 474J).

Respond~nt: Lifetime, Inc., also objects to the admission of CX 14. which is the transcript of hearings conducted by an attorney-examiner of the Federal Trade Commission on September 3 , 19;'58, prior to the issuance of the. complaint herein. It contains the sworn testimony of respondent Sam Leonard who appeared with his attorney, the s~me attorney representing him in this proceeding. Hesp(',nflent:~ ~ C'Olm:~el objected to the. admission of this document "when it is not used for the purpose of attacking credibility, but is only used in the main case of the Commission." He cites, howe.ver, no authority in support of his argument; nor, indeed, do I believe he could. Counsels objections regarding the impeaclDnentof a witness are perfectly correct but have no application here where the statements are those. of a party in interest and constitute admissions. (See 'Yig1TIore on Evidence Vol. 4, par. 1048 through 1052. ) As respects counsel's objections to the testimony of some of the witnesses as to the contents of a contract or an advertisement without the production of such contract or ndvertise.ment, it should be. noted that such testimony \Vas adduced only after it was asc.ertained that the. witness did not have a copy of the doc.ument. Oral testimony on the. conte.nts of a writing should be allowed where the. ,writing has been lost or is missing or is otherwise not in court. :Moreover, in this particular ease very little depends upon the testimony of any witness regarding the terms or contents of a writing, be it :1, contract or an advertisement. As has been shOlvn above" the teasonable meaning of the respondents' advertisements can be ascertained from the advertisements themselves. The terms :

LIFETIME , INC. , ET AL. 1247 1231 Discussion of the contracts entered into with the respondents, insofar as relevant to this proceeding, are ascertainable from the printed forms admittedly used by the respondents and from the explanations of these contracts given by respondent Sam Leonard.

Counsel for the respondents argues that the complaint should be dismissed as respects respondent Youngstown Ilomes because there is no proof that the respondent inserted advertising in the newspapers or is engaged in interstate commerce, or that it made any representations concerning its product. This argument has 110 substance. The individual respondents in this proceeding, :Messrs. :Moskowitz and Leonard, are the sole stockholders of both corporations. Contracts for shell homes are made with Youngstown Homes; contracts for other products and services are made with Lifetime, Inc. Lifetime Inc., arranged for the advertising in newspapers, and, in that connection, advertised the Y oungsto,,- I-Iomes for that corporate respondent. Salesmen following up leads generated by such advertisements represented both Lifetime, Inc., and Y ol1ngstown I-lomes in soliciting contracts. It. must. be concluded, therefore, that respondent Youngstowl1 I-Iomes does advertise in nerfspapers through Lifetime, Inc. ; that it is engaged in interstate commerce in soliciting contracts within and without the State of New Jersey; that it uses salesmen in the sale of these products 'which salesmen make representations concerning its products. As counsel for the respondents stated Youngstown l--Iomes, Inc., is actively conducting R major portion of the business resulting from those advertisements; the stock of Y Olmgstown I-Iomes, Inc., is owned by the same stockholders as Lifetime, Inc. and for all intents and purposes they use Youngstown Homes for the major portion of their work today.

Finally, counsel for the respondents urges that the individual respondents, Samuel :Moskowitz and Sam Leonard, have no personal responsibility for any of the charges made by the Commission. ",With this argument I cannot agree. In the Commission s case in chief it was developed that these respondents are the president and secretarytreasurer of the two corporate respondents, each owning 50% of the stock of each of the corporations. ltIr. l\lickelson of Youngstown Industries, Inc., who negotiated cooperative advertising arrangements ",ith these corporations, testified that he dealt. with these men. :Mr. Leonard testified that he entered into the. contract for advertising with Yol1ngstO\yn Industries as president of the corporate resp:mc1onts. 1-Ie further admitted that he fmc1 :Mr. 1Ioskowitz entered into ('ontraets, consulted .with subordinates wrote cheeks approved adertising, dealt with the advertising agency and signed checks for :l,advertising. The supplier of the roofing materials testified that he , :, 1248 FEDERAL- TRADE COMMISSION DECISIONS Order 59 F.

dealt with Mr. Leonard in c.connection with price, delivery and normal inter-c.company matters. In addition, several of the customer witnesses identified respondent :l\1oskowitz as the man with whom they dealt. Respondents were given every opportunity to present evidence in ~support of their case. Respondents called but two witnesses to the stand. One of them, l\ir. Schorza, the general manager of Lifetime Inc., testified that he was the general manager of the company and ran its aft'airs. He confirmed, however, that the individual respondents were actively engaged in the day-by-day business operations of the c.corporate responde,nts. I-Ie stated that 1\11'. Leonard determined the advertising budget, that respondent l\foskowitz handled the complaint department, that l\1r. Schorza would persuade Mr. Leonard to hire the salesmen; that ~Ir. Leonard -worked out the advertising arrangements with 1\fr. l\fickelson. Respondents' other witness, a 1\11'. Gold, who was with the advertising agency, confirmed :1\11'. Leonarcrs control of the ud,-ertising budget.. After the examination of these two witnesses, which con.'3umed less than one and one half hours counsel for the respondents stated In view of what has happe.nec1 here, sir, I am not going to eall any more witnesses. I will rest at this point.. I feel that we are in an inquisition, sir, rather than. * If the respondents had evidence to refute the charge of the Commis- ~ion, their failure to produce such evidence warrants the justifiable inference that such evidence.e would be unfavorable to them and constitutes strong c.onfirmation of the Commission s c.charges. 'Vild accusations of inquisition are no substitute for evidence. CONCLUSION The aforesaid acts and practices were and are all to the prejudice and injury of 'the public. and of respondents' competitors and constituted and now constitute unfair and deceptive acts and pract.ic.es and unfair methods of competition in commerce within the intent and meaning of the Federal Trade Commission Aet.. Upon the foregoing findings of fact and conclusions of Jaw. the following order is hereby entered:

ORDER 1 t is orYler- That respondents Lifetime, Inc.~ a, corporation, and its oflicers, and Youngstown Homes, Inc., a corporation, and its ofi1cers and Sam Leonard and Samuel :Moskowitz indivic1ually and as ollic.ers of each of tJle said corpora60ns, and respondents' representa6,agents and employees, directly or through any corporate 01' ot her deice, in connection "with the offering for sale, sale or clis,tribution of houses, garages or building materials and supplies~ inelllding simu- :

LIFETIME , INC. , ET AL. 1249 1231 Order lated stone fronts, roofs, bathrooms, heating equipment and basement waterproofing or any other articles of merchandise in commerce, as commerce" is defined in the Federal Trade Commission Act, do f0l1hwith cease and desist from:

1. Representing, directly or indirectly, that merchandise is offered for sale when such offer is not a bona fide offer to sell the merchandise so offered or that merchandise is offered for sale at a specified price unle.ss the price so represented is in fact the price of the merchandise offered f0'r sale;

2. Representing, directly or indirectly, that said products are guaranteed unless the nature and extent of the guarantee and the manner cle~rly and con-in which the guarantor will perform thereunder are all of theirspicuously disclosed and respondents do in fact fulfill requirements under the tenTIS of the said guarantee; 3. Representing, directly or indirectly, that respondents are a part , a division of Americanof or affiliated with Youngstown Kitchens Radiator and Standard Sanitary Corporation, or Youngstown Industries, Inc., a Pennsylvania corporation; or that respondents are a part of or affiliated with any other person, firm or corporation unless such is the fa.et;

s..-tlesmen 4. Representing, directly or indirectly, that respondents' are sales managers or owners of Youngstown Kitchens, a division American Radiator and Standard Sanitnry Corporation; or that respondents' salesmen occupy any business or professjonal status other than is the fact;

5. Representing, directly or indirectly, that respondents' so-called of roofing; or glass- lined roofing will outlast any other kind or form that any of the aforesaid products will outlast our ont-p€.rform any other product or kinds of products or will perform in a manner or to degree or extent contrary to fact;

6. Representing, directly or indirectly, the respondents fashion of said products are of a eertainstone" is natural stone; or that any grade, quality or composition unless such is the fact; 7. Representing, directly or indirectly, that respondents will or can make all basements \yaterproof from the exterior \yit.hout digging; c.onstruct any of the aJoresaidthat respondents will or can install or goods or products or perform any of the aforesaid ser vic'.es in a manner or to a degree or extent contrary to fact; 8. Representing, directly or indirectly, that. the aforesaid products and services sold or performed by respondents are of first-class quality, unless such is the fact;

9. Procuring the signature of pure-hasers on negotiable promissory 1l0t.~ without revealing to such pure-hasers that they are Sif:T11ing a 6D3-490--64---- . , 1250 FEDERAL TRADE COM11ISSION DECISIONS Opinion 59 F.

negotiable promissory.. note and revealing the amount, terms and conditions of the PI:pmissory note; . 01' repi'esenting, directly or indirectly, that respondents themselves finance the contractual indebtedness assumed by purchasers of the aforesaid goofls a,nel services unless such is the fact.

OPINION OF THE CO3BII~SIO:;..:r By DIXON, Commissioner:

The complaint in this matter charges respondents with unfair methods of competition and unfair and deceptive acts and practices in violation of the Federal Trade Commission Act through misrepresentation with relation to prices, guarantees, business assoc.iations and affiliations status of salesmen, and the composition, characteristics and quality of products and sen-ices offered or sold. It further alleges that respondents have induced purehasers without their knowledge to Sig11 negotiable promissory notes providing for payment of financing charges in amounts not agreed to' by them.

The hearing examiner, in his initial decision filed April 21, 1961 , as amended to correct a typographical error by his order of :May 15, 1961 found that all the charges in the complaint had been sustained by the evidence. His decision contains an order to cease and desist the practices so found to be illegal.

Respondents have appealed from the initial decision. They have presented the issues in the following terms: (1) whether the complaint should be dismissed for alleged failure in the proof of the charges and (2) whether in any event: the complaint should be dismissed as to Youngstown I-Iomes, Inc., and as to' Sam Leonard and Samuel ~10skowitz, individually, because of the alleged failure to show responsibility of these respondents fo"r the practices charged. Respondents are Lifetime, Inc.., a Pennsylvania corporation Youngstawn l:IO'mes, Inc.., a New ~ ersey corporation, and individuals Sam Leonard and Samuell\1oskawitz. The individual respondents eac.h own 50% of the stack of the. corporate respondents, and they are the c.orparations' sole oflicers. Sam Leonard and Samuel :Moskowitz are, respectively: president and secretary-treasurer, of the corporate concerns.

The business of the respondents is in the home improvement and home construction fields. Respondents have engaged in advertising, offering for sale, and se.lling, and in the installation and construction of houses, garages and home building materials ineluding simulated ~In this outline of the facts we use the term "respondents " to mean those respondents fOlllHl hy the examiner to be responsible for the acts and practices charged. but we reserve the (jllf'r..:tion of the sufficiency of the evidence to sustain the charges as to certain of the recponctents for later discussion and determination. .

LIFETIME , INC. , ET AL. 1251 1231 Opinion stone fronts, roofs, bathrooms, heating equipment and basement water-proofing. The lnethod of business ~mployed is to advertise sllch products and services for sale in newspapers and other publications. Some of the advertisements were under respondents' own names; others were carried under the name of Youngstown Industries. " The latter company is YoungstO\\'n Industries, Inc. :L concern separate from the respondents and not involved in this proceeding. Youngstown Industries and the respondents jointly advertised their separate products and services and shared the expenses of such advertisements. Under the arrangement, telephone inquiries to the numbers listed in the ac1vertjsements, which were generally telephone answering services, would be relayed to the company whose products were concerned, i. , Lifetime, Inc.~ and Youngstown I-Iomes, Inc., on the one hand, or Y oungstoiYn Industries on the other. Persons responding to the advertisements were contacted by salesmen of the respondents. These salesmen would show literature to the prospects and would make oral representations concerning the goods and 8.e.I' vices oflered, and they would induce purchasers to sign contracts and enter into financial arrangements with respondents. The Issue on the Substantiality of the Evidence. As to the charge dealing with false representations on prices and offers to selJ , the hearing exa,miner found that, contrary to their representations, respondents do not and will not make damp anc1leaking basements dry for $44. , do not and will not sell a large and substantial shell home of :L kind adequate to accommodate a three compartmented bathroom, kitchen with eating space, large picture window and basement for $1 995. , do not and will not completely erect a garage for $300. , do not and will not install a glass~lined roof for $66. , do not and will not install a genuine stone frontor a simulated stone front on a house for $44. , do not and will not install a complete bathroom including fixtures for $44. , and do not and will not sell a gas-forced air furnace complete with ducts rtnd all" equipment necessary for the operation thereof for $139.00. lie further found that such price amounts were advertised for the purpose of inducing inquiry and that thereafter respondents undertook to sell the prospective purchasers other and more expensive products and services. Respondents do not contend in most of the instances, as we understand their argument, that the products and services, as found to be represented, \were available at the advertised prices. Their principalobjection is to the examiner s interpretation of their advertisements. Respondents say that the examiner has ignored qualifying &:

Opinion 59 F.

expressions in the various contested representations such as "for as low as" in reference to the shell house for $1 995; "$300 and up" and delivered" as to the garage advertisement; "Additions, Repairs, Remodeling, Alterations No job too large or small", and "Jobs done low as" referring to the home improvements advertisement; and other similar qualifying statements. Such qualific.ations in the various advertisements do not make the representations truthful. The advertisements of shell houses provide a good example for consideration. No shell house of the dimensions and quality represented was available for 995.00. This the respondents do not deny but claim that a small shell frame (apparently a 16' x 20' structure not including porch) would be built for the stated amount and that the expression for as low as" in conjunction with the advertised price sufficiently demonstrated it to be the minimum price. In this instance, however, the house as represented, i. , a substantial shell home adequate to accommodate a three compartmented bathroom kitchen with eating space, large picture window and basement, was not available at the minimum price. This advertisement was no mere exaggeration; it illustrated a completely diflerent structure from that which could 00 obtained at the advertised price. To that extent it was false and deceptive. Respondents' reliance on Oster' moor Co., Inc. Y. Federal Trade CO1n7ni88ion 16 F. 2d 962 (2d Cir. 1927) (1 S. & D. 589J, to justify or defend this and other pictorial deeeptions is misplaced. The Court's holding in the case that there. was no basis for the Commission s finding that substantial numbers of purchasers had been misled and deceived would distinguish it from this proceeding. 'Ve also note that the case in certain respects appears not tQ be in acc.ord with more recent developments in the law in this an' , but we find no necessity for a discussion here of such considerar.ions.. Respondents' garage advertisement offers a further example. erected ganLge, as pictorially represented, would be sold for the pric,B of $300. For that price respondents would deliver materials to construct the garage. The advertisement is false even though the words and up" appear beeanse no garage would be built for the minimum. The word "delivered" would fail in our opinion to instruct a prospective purchaser to expect only the materials for a garage. As a further example for discussion ",...-e refer to the advertisement relating tQ bathrooms. Respondents assert that no one would be misled tQ believe they would receive a modern bathroom for $44. the price quoted in a typic-al advertisement, because it contains the words Additions, R.epairs, Remodeling, .AJterations No job too large or small' and "Jobs done low as . In this instance it, is the over-all impression received from the advertisement which creates the decep- LIFETIME , INC. , ET AL. 1253 1231 Opinion tion. The words "M:modern Bathrooms" in large block letters so connect the illustration of a modern bathroom with the price of $44. that the effect is to convey the impression that the offer is a modern bathroom for $44.00. The added language fails to dispel such an impression. Several witnesses testified that they believed from the advertisement that they could get a bathroom installed for the quoted for such price, a fact not in dispute.price. No bathroom was available "\Ve have examined the other contested advertisements and have eonsidered the evidence as to dry basements, glass-lined roofing, stone fronts, and automatic gas heat and conclude that in each case the advertisements, by illustration and otherwise, promise to provide at a certain low price merchandise and service which was not available at such price. "\Ve note, however, that on the advertisements for a dry basement the hearing examiner has eonstrued such to mean that (Ill basements are made waterproof. vVe do not believe that interpretation is correct and will amend the initial decision in this respect. That the goods or services offered were not available for the prices stated is clear from all the evidence including a tabulation of over 5;600 000. 00 of respondents' sales made between October 1957 and April 1958 covering 388 contracts. In that period it does not appeal' that even one sale was made of any of the above mentioned products and services at the prices advertised. :Moreover, the testimony various purchasers-witnesses makes clear that respondents did not seek to sell products and services at the low prices mentioned, but, through salesmen, advised prospective purchasers that the goods were not availa ble or that they would not want them. 1Ve concur in the examiner findings on this question. Respondents' exceptions, therefore, to the substantiality of the e,-jc1ence on the above discussed charge are Tejeet.ed.

Federal Trade Com- "\Ve note that in Better Living, Inc. et al. v. mission 259 F. 2d 271 (3d Cir., 1958) (6 S. & D. 453J, the Third Circuit Court. of Appeals afilrmed per cm'iam the, Commission s order which i11e1m1e(1 a prohibition against. representing that articles are offered O1' sR1e fit. a. eerta in price or under' certa.in cond itions when such offer is llot H. bona fide, offer to sell the artic.les so and as, offered. ,Ve have. considered the points raised by the respondents on the hearing examine.r s findings as to the ot.1wr spec.ific charges: and we. are satisfied that in each instance these findings are supported by substantjtal evidence.

Among such charges js one that. respondents llaye falsely represented that their products sold and services performed would be of the first grade and the highest quality. The hearing examiner found this allegation supported by the reeorcl, to which finding respondents take exception. They say they have not so represented: that. their repre- Opinior: 59 F.

" 0 sentation of "first class is a customary claim of American suppliers and artisans and is no more than palling.

Respondent' s advertising represe.ntations as to quality of work and materials include this statement:

We at Youngstown Industries (meaning Lifetime, Inc. ) unconditionally and unequivocally guarantee in writing first class craftsmanship and materials. further agree to furnish especially trained mechanics to assure proper installation. Absolute sa tisfaction shall be yours. The Commission is satisfied that this would be read by many prospective purchasers as assuring them that the job and the materials used would be of the first grade and highest quality. Such an absolute assurance of quality in a field in which grade and quality distinctions can be and are made and where quality is of prime importance to prospective purchasers cannot be regarded in the category of puffing. This is especially so when consideration is given to the form in which the representation appears, that is, a gnara.ntee of the premium nature of the work and materials.

The examiner found that not all of the goods sold and services performed by respondents were of first class quality, and the record contains substantial evidence to Support such finding. Respondents' eontentions on this and the questions as to other specific charges here, considered are rejected.

Responsibility of You.ngstorwn Ii O'Jne8 ~ Inc. , and individ1WZS. Smn Leonard and Samuel :Moskowitz each own 50% of the stock in Lifetime, Inc., a Pennsylvania Corporation, and Youngstown 11omes Inc., a K ew Jersey corporation, the corporate respondents. They are respectively, president and secretary-treasurer of both corporations. All formulation of policy, direction and control of the corporations is in their hands. There are no other officers. In 1956 Sam Leonard and Samuel :Moskowitz signed Stipulation No. 8807 with the Fe,deral Trade Commission for Lifetime, Inc., agreeing not to engage in certain unfair and deceptive. acts and practices. ,Ye believe that the examiner s findings as to the responsibility of theinclividuals are fully supported by the record.

l\Ioreover, the individuals chflrgecl 11(1 ve done. business through one corporation after another. Lifetime, Inc., incorporated sometime in 1952, certsed its active operations in October.r 1959, about the same time as the complaint in this proceeding y;a.s issued, and the business thereafter "\yas largely continued thll)ugh )- ol1ng:::town 1-10111es, Inc. Hcspondents Leonard and :Moskmyitz each own 25% of the stock of another corporation, Standard A_american, Inc., with offices at 6701 North Broad Street, Philadelphia, Pennsylvania, the same address as that used by Lifetime, Inc. The reeonl shows that. Sa-m Leonard is president and that Sanll1e1 :JIoskc)"\yitz is treasurer of Standard LIFETIME , INC. , ET AL. 1255 1231 Opinion Americail, Inc., and that such corporation is engaged in advertising and selling items relating to home improvement., repairs and aJterations, including certain of the products involved in this proceeding. To make the order in this matter fully effective in pre.venting the unfair practices as charged and found, it is essential that respondents Leonard and :Moskowitz be individually included in such prohibition. The cases clearly sustain the Commission s authority in this coilllection. Federal Trade OO'lTl/lnission v. StandaT'd Ecb.lcatf,on Society, et aZ. 302 S. 112, 120 (1937) (2 S. &. D. 429J ; Steelco Btainless Steel, Inch et ell. v. Federal Trade C/O'ln'7Tdss-ion 187 F. 2d 693 , GO7 (7th Cir. , 1951) decision in T1Ylins- C/onti. r 5 S. &. D. 2G5J. See also the Commission nental Olea,,'in.g Ifo. u.se, Inc., et al. Docket No. 714G (October 20 1959) and cases cited therein.

respondents also contend that there is no evidence of the eomplicity of Youngstown I-Iomes, Inc., in the practices charged to be illegal. is appareilt from respondents' answer to the complaint that respondent Youngstown Homes, Inc., shares the responsibility for the unfair practices a.1legec1 and proved. For example, respondents admit in Paragraph Three of their ans',er that. the corporate respondents have caused products sold and services rendered by them to be advertised in newspapers and other publications appen-ring' under the. name Yonngstown Industries and that saJesnwn C'ontnct. cn~t()rner~ on behalf or corporate respolldent~~. .Another pxample j~ contnlnp-(l in Pa,ragraph Six of the ans"er where respondents admit in pmt ;; that the advertising, as in all advertising, \"as pl need by COip(jI' /de, e8jiondei1is for the purpose of having pl'ospectin~ purcha~ers m~~ke inquiries respecting said goods and services otTered for ~ale. :: (Emphasis supplied. ) "'\Ve conclude from the ac1rnission\s and from the evidence that the business of the t",o corporations was so intenyoven a~ to make both corporations responsible for the acts and practices herein charged and proved. The contentions regarding the responsi1Jility of Y onngstown I-Iomes, Inc., and the inc1ividualrespondents arc rejected, We note that the order is inappropriate in senTal re~pe.('.ts. The findings on certain items eovel' both products and ~:en-ices whereas the order on some such items is restricted to merchandise. Paragraph e of the order in referring to "fashion stone:' does not appear to conform to the finding on the subject.. Certain of the prohibitions use the phrase "unless such is the fact" or similar expressions which should be eliminated. The initial decision will be modified as to these matters. Additionally, the initial decision in part (c) of paragraph 7 thereof will be modified to make clear that respondents are not affiliated with Youngstown Industries, Inc., except that these parties engage in a joint advertising activity.

Order 59 F.

Respondents' appeal is denied. It is directed that the initial decision be modified in conformity with the views herein expressed and that, thereafter, the initial decision, as so modified, be adopted as the decision of the Commission. An appropriate order will be entered. FIN AL ORDER This matter having been heard by the Conllnission upon respondents' appeal from the hearing examiner s initial decision, and upon briefs and oral argument in support thereof and in opposition thereto; and The Commission, for the reasons stated in the accompanying opinion, having denied the respondents' appeal, and having directed that the initial decision be modified to conform to its views expressed in the opinion, and that, thereafter, such dec.ision, as modified, be adopted as the de.c.ision of the Commission: I t is ordej' That the first line in part (a) of paragraph 6 of the Findings of Fact contained in the initial decision be, and it hereby , modified to read as follows:

(a) that basements are made waterproof for $44.00; It ~.s further ordered That the first sentence of part (c) of paragraph 7 of the Findings of Fact contained in the initial decision he and it hereby is, modified to read as follows: (c) Respondents are not a part of or in any manner affiliated with Youngstown ICitchens, a division of '..American Radiator and Standard Sanitary Corporation, 520 South Ellsworth A venue, Salem, Ohio, nor ate they a part of, or affiliate.d with, Youngstown Industries, Inc., of Philadelphia, Pennsylvania, exc.ept that as to the latter there is joint activity.

I t is furthe'J' ordered That the order contained in the initial decision , and it hereby is, modified to read as follows: , a-nd It i.s ordered Tha-t respondents Lifetime, Inc., a corporation its officers, and Youngstown J-Iomes, Inc., a corporation, and its offieels, and Sam Leona-I'd and Samuel :Moskowitz, individually and as oflicers of each of the said corporations, and respondents' representati,' : agents and employees, directly or through any c.corporate or other device, in connection with the offering for sale, sale or distribution of houses, garages or building materials and supplies, including simulated stone fronts, roofs, bathrooms, heating equipment and basement waterproofing or any other articles of mereha-nelise is commerce.. a.s "commerce" is defined in the Federal Trade Commission Ac.t, do forthwith cease and desist from:

1. Representing, directly or indirectly, that merchandise or service is offered for sale when such offer is not a bona fide offer to sell the merchanelise or service ~() offered, or that merchandise or service is LIFETIME , INC. , ET AL. 1257 1231 Order offered for sale at a specified price unless the price so represented is in fact the price 01 the merchandise or service offered for sale; 2. Representing, directly or indirectly, that said products or services are guaranteed unless the nature and extent of the guarantee and the ma,nner in which the guarantor. will perform thereunder are clearly and conspic.uously disclosed and respondents do in fact fulfill all of their requirements under the terms of the said guarantee; 3. Representing, directly or indirectly, that respondents are a part of or affiliated with Youngstown Kitchens, or Youngstown Industries Inc., a Pennsylvania corporation; or misrepresenting respondents connection or affiliation with any other person, firm or corporation; 4. Representing, directly or indirectly, that n~spondents' salesmen are sales managers or owners of Youngstown Kitchens, or otherwise misrepresenting the business or professional status which respondents' salesmen occupy;

5. Representing, directly or indirectly, that respondents' so-called glass-lined" roofing will outlast any other kind or form of roofing; or othenvise misrepresenting the lasting or performance qualities of the aforesaid products in relation to any other product or kinds of prod nets or misrepresenting the performance qualities of said prodlH'.ts in any other manner;

6. Representing, directly or indirectly, that respondents' simulated 01' so-c.alled stone is natural stone; or otherwise misrepresenting the grade, quality or composition of any of sa.icl products; 7. Representing, directly or indirectly, that respondents will 01' enn make all basements waterproof from the exterior without digging; 8. Repre,senting, directly or indil'ec.t1y, that. respondents' products 01' services which are defective or deficient sold or performed by respondents are of first-class quality;

9. Procuring the signature of purchasers on negotiable promissory f\, notes without revealing to such purehasel's t)1111 they are. signing negotiable promissory note and revealing the amount, terms and conditions of the. promissory note; or represenhng, directly or indirectly, t hat respondents themseh-es finance the contrnchml indebtedness as- ~:nme.d by purchasers of the aforesaid goods and services. It is further o)'(le?' Thatthe initial decision as so modified bp and it hereby is, adopted as the decision of the Commission. ((-:0) It -is further olde)'ed That the respondents shall, within sixty days after service upon them of this order, file with the Commission i11 ;1 report, in ,writing, setting forth in detail the manner and form ,which they h:n'e complied ,",'ith the order to ~~eas(' and desist eontaille(l in the initj~d decision as modified.

CHEMICAL COMPOUNDS, INC., ET AL. 1357 1354 Complaint 1. Falsely or deceptively stamping, tagging, labeling, or otherwise identifying such products as to the character or amount of the constituent fibers contained therein.

2, Failing to securely affix to or place on each product, a stamp, tag, label, or other means of identification showing in a clear and conspicuous manner, each element of information required to be disclosed by Section 4(a) (2) of the Wool Products Labeling Act of 1939. 3. Failing to identify each of the fibers contained in such products by its common generic name.

It is further ordered, That respondents Eimiger Mills, Inc., a corporation and its officers, and Jack H. Einiger, individually and as an officer of said corporation, and respondents’ representatives, agents, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale or distribution of fabric or any other products in commerce, as “commerce” is defined i the Federal Trade Commission Act, do forthwith cease and desist from misrepresenting the character or amount of constituent fibers contained in such products on invoices or shipping memoranda applicable thereto or in any other manner.

It is further ordered, That the respondents herein shall, within sixty (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.