Mr. OVERCASH. I think that is true, because I don't think that the State could control sales outside the State to the local institution. Mr. BALLINGER. Would you give a copy to the committee?

Mr. OVERCASH. I will be glad to.

Chairman PLOESER. That will be made a part of the record. (The act referred to is as follows:)

UNFAIR SALES ACT

REVISED STATUTES OF NEBRASKA 1943

Sections 59-1201 to 59-1206 as amended by the 1947 legislature. This law becomes effective September 7, 1947.

Section

59-1201. Act; how cited.

59-1202. Definition of terms.

59-1203. Sales at less than cost; advertising; when unlawful.

59-1204. Unfair advertising in newspaper; publisher not liable.

59-1205. Persons damaged; remedy.

59-1206. Act inapplicable, when.

59-1201. Act; how cited. Sections 59-1201 to 59-1206 shall be known and designated, and may be cited as the "Unfair Sales Act."

59-1202. Definition of terms. In this Act, unless the context otherwise requires; (1) The term "cost to the retailer," means the actual cost of the merchandise to the retailer, or the replacement cost of the merchandise to the retailer, whichever is lower, less all trade discounts, to which shall be added (a) freight charges not otherwise included in the invoice cost or the replacement cost of the merchandise as herein set forth, (b) cartage to the retail outlet if done or paid for by the retailer, which cartage cost, in the absence of proof of a lesser cost, shall be deemed to be three-fourths of 1 percent of the cost to the retailer as herein defined after adding thereto freight charges but before adding thereto cartage and mark-up, and (c) a mark-up to cover a proportionate part of the cost of doidng business, which mark-up, in the absence of proof of a lesser cost, shall be 6 percent of the cost to the retailer as herein set forth after adding thereto freight charges and cartage but before adding thereto a mark-up. (2) The term "cost to the wholesaler" means the actual cost to the wholesaler or the replacement cost to the wholesaler, whichever is lower, less all trade discounts, to which shall be added (a) freight costs not otherwise included in the cost charged by the manufacturer or the replacement cost of the merchandise as herein set forth, (b) cartage to the wholesale outlet if paid for by the wholesaler, which cartage cost, in the absence of proof of a lesser cost, shall be deemed to be three-fourths of 1 percent of the cost of the wholesaler as herein defined after adding thereto freight charges but before adding thereto cartage and mark-up, and (c) a mark-up to cover a proportionate part of the cost of doing business, which mark-up, in the absence of proof of a lesser amount, shall be 2 percent of the cost to the wholesaler as herein set forth after adding thereto freight charges and cartage but before adding thereto mark-up. (3) The term "replacement costs," means the cost per unit at which the merchandise sold or offered for sale could have been bought by the seller at any time within thirty days prior to the date of sale or the date upon which it is offered for sale by the seller if bought in same quantity or quantities as the seller's last purchase of the merchandise. (4) When one or more items are advertised offered for sale, or sold with one or more other items at a combined price, or are advertised, offered as a gift, or given with the sale of one or more other items, each and all of said items shall for the purposes of this Act be deemed to be advertised, offered for sale, or sold, and the price of each item named shall be governed by the provisions of subsection (1) hereof. (5) The term "cost to the retailer," as defined in subsection (1) hereof, means bona fide costs; and purchases made by retailers at prices which cannot be justified by prevaiilng market conditions within this State shall not be used in determining cost to the retailer. (6) The term "cost to the wholesaler," as defined in subsection (2) hereof, means bona fide cost; and purchases made by wholesalers at prices which cannot be justified by prevailing market conditions with this State shall not be used in determining cost to the wholesaler. (7) The terms "sell at retail," "sales at retail," and "retail sale,"

mean and include any transfer for a valuable consideration, made in the ordinary course of trade or in the usual prosecution of the seller's business, of title to tangible personal property to the purchaser for consumption or use other than the resale or further processing or manufacturing. The above terms shall include any transfer of such property where title is retained by the seller as security for the payment of the purchase price. (8) The terms, "sell at wholesale," "sales at wholesale," and "wholesale sales," mean any transfer for a valuable consideration, made in ordinary course of trade or the usual conduct of the seller's business of title to tangible personal property to the purchaser for purposes of resale or further processing or manufacturing. The above terms include any transfer of such property where title is retained by the seller as security for the payment of the purchase price. (9) The term "retailer" means every person, partnership, corporation, or association engaged in the business of making sales at retail within this State: Provided, In the case of a person, partnership, corporation, or association engaged in the business of making both sales at retail and sales at wholesale, such term shall be applied only to the retail portion of such business. (10) The term "wholesaler" means every person, partnership, corporation, or association engaged in the business of making sales at wholesale within this State: Provided, In the case of a person, partnership, corporation, or association engaged in the business of making both sales at wholesale and sales at retail, such terms shall be applied only to the wholesale portion of such business.

59-1203. Sales at less than cost; advertising; when unlawful. It is hereby declared that any advertising, offer to sell, or sale of any merchandise, either by retailers or wholesalers, at less than cost as defined in this act, with the intent, or effect, of inducing the purchase of other merchandise, or of unfairly diverting trade from a competitor, or otherwise injuring a competitor, impair and prevent fair competition, injure public welfare, and are unfair competition and contrary to public policy and the policy of this act, where the result of such advertising, offer, or sale is to tend to deceive any purchaser or prospective purchaser, or substantially to lessen competition, or unreasonably to restrain trade, or to tend to create a monopoly in any line of commerce.

59-1204. Unfair advertising in newspapers; publisher not liable. The publication of any advertisement in contravention of the provisions of this act by any newspaper at the request of the retailer or wholesaler shall not render the owner of the newspaper or his agents or servants liable for any penalty as in this act provided.

59-1205. Persons damaged; remedy. Any person damaged, or who is threatened with loss or injury by reason of a violation of this act, shall be entitled to sue in any court of competent jurisdiction against any damage or threatened loss or injury by reason of a violation of this act.

59-1206. Act inapplicable, when. The provisions of this act shall not apply to sales at retail or sales at wholesale (1) where merchandise is sold in bona fide clearance sales, if advertised, marked, and sold as such; (2) where perishable merchandise must be sold promptly in order to forestall loss; (3) where merchandise is imperfect or damaged or is being discontinued and is advertised, marked, and sold as such; (4) where merchandise is sold upon the final liquidation of any business; (5) where merchandise is sold for charitable purposes or to relief agencies; (6) where merchandise is sold on contract to departments of the Government or governmental institutions; (7) where the price of merchandise is made in good faith to meet competition; (8) where merchandise is sold by any officer acting under the order or direction of any court; or (9) where merchandise is sold by manufacturers or processors.

Chairman PLOESER. Would you care to comment on what you think has been the success of this act?

Mr. OVERCASH. The present act?

Chairman PLOESER. Yes.

Mr. OVERCASH. I am informed in the tobacco industry the particular case that has been brought up has had a beneficial effect. I am not in position to say how much the act has done generally in the field due to the fact that our office is not responsible for the enforcement of the act and we are not in as close touch as we might be.

Chairman PLOESER. Give us the name of the case you mentioned.

Mr. OVERCASH. The case I mentioned is pending in the district court of Dodge County, Nebr., and is the Phillips Tobacco Co., plaintiff, versus Jerry B. Koozi, defendant,

Chairman PLOESER. I think it would be well if we have the decision of the district court in the record.

Mr. OVERCASH. A copy of it?

Chairman PLOESER. Yes; it would be well for our records.

Mr. OVERCASH. I do not know whether I have an extra one or not. I will mail it to you.

Chairman PLOESER. Anything further?

Mr. OVERCASH. Our present unfair sales act comprises a short law of 6 sections, R. S. Nebr. 1943, sec. 59-1201-1206. It was enacted in 1941 and the first section involving definitions was amended at the last session of the legislature to include cost definitions for wholesalers separate from retailers.

The act applies generally to retailers and wholesalers. The heart of the act is section 59-1203, reading as follows:

It is hereby declared that any advertising, offer to sell, or sale of any merchandise, either by retailers or wholesalers, at less than cost as defined in this act, with the intent, or effect, of inducing the purchase of other merchandise, or of unfairly diverting trade from a competitor, or otherwise injuring a competitor, impair and prevent fair competition, injure public welfare, and are unfair competition and contrary to public policy and the policy of this act, where the result of such advertising, offer, or sale is to tend to deceive any purchaser or prospective purchaser, or substantially to lessen competition, or unreasonably to restrain trade, or to tend to create a monopoly in any line of commerce.

The act exempts newspapers from any responsibility for printing ads that violate the act and completely exempts the following as set forth in section 59-1206:

The provisions of this act shall not apply to sales at retail or sales at wholesale (1) where merchandise is sold in bona fide clearance sales, if advertised, marked, and sold as such, (2) where perishable merchandise must be sold promptly in order to forestall loss, (3) where merchandise is imperfect or damaged or is being discontinued and is advertised, marked, and sold as such, (4) where merchandise is sold upon the final liquidation of any business, (5) where merchandise is sold for charitable purposes or to relief agencies, (6) where merchandise is sold on contract to departments of the government or governmental institutions, (7) where the price of merchandise is made in good faith to meet competition, (8) where merchandise is sold by any officer acting under the order or direction of any court, or (9) where merchandise is sold by manufacturers or processors.

There are no criminal penalties included in the act. All that it does is purport to vest a remedy in persons that may be damaged by the act. Section 59-1205 provides:

Any person damaged, or who is threatened with loss or injury by reason of a violation of this act shall be entitled to sue in any court of competent jurisdiction against any damage or threatened loss or injury by reason of a violation of this act.

It is to be observed that this act in section 59-1203 prohibits sales at less than cost where there is the described intent or effect and where there is also a result as indicated by the language. One district court has upheld the constitutionality of this act and this case may reach our highest court for a ruling as to the validity of the act.

An earlier act of this general nature was held unconstitutional by our supreme court in the case of State v. Ruback (135 Nebr. 335). That act, passed in 1937, contained criminal provisions and was con

strued as prohibiting innocent sales below cost. The court said that in the absence of a wrongful intent, purpose, or knowledge, sales below cost could not be prohibited. The only requirement in this act was that the sale or offer must be such that it "may lessen, injure, destroy, prevent, burden, or suppress the competition" and the court held that under our Nebraska Constitution this was not enough and the act was too indefinite to be sustained as a criminal law.

We have a motor dealers' license law which when enacted contained certain restrictions as to sales below cost. In the case of Nelsen v. Tilley (137 Nebr. 327), it was held that a provision in the law justifying license revocation for "willfully and habitually making excessive trade-in allowances on used motor vehicles for the purpose of lessening competition or destroying a competitor's business" was valid. This provision has since been omitted from this law by action of the 1945 legislature.

Chairman PLOESER. We thank you. (Witness excused.)

TESTIMONY OF FRANZ D. RAYMER, ON BEHALF OF OMAHA

LEATHER CO.

(The witness was duly sworn and testified as follows:)

Mr. BALLINGER. State your name.

Mr. RAYMER. Franz D. Raymer.

Mr. BALLINGER. What company do you represent?

Mr. RAYMER. The Omaha Leather Co.

Mr. BALLINGER. Are you president of the company?

Mr. RAYMER. I am a partner. It is a partnership.

Mr. BALLINGER. You have heard the testimony this morning of Mr. Kotin and Mr. Levey. Have you any comments to make on their testimony from this standpoint? Do you believe that in this area there are violations of the Robinson-Patman Act by your competitors? Mr. RAYMER. Well, I could not prove it. I have suspicions at times, but that is merely rumor.

Mr. BALLINGER. Do you have salesmen?

Mr. RAYMER. Yes.

Mr. BALLINGER. When they call upon these shoe-repair shops did they ever tell you that they could not make a sale because a competitor of yours has sold them much cheaper?

Mr. RAYMER. Oh, we hear that right along, but that is a common complaint of salesmen.

Mr. BALLINGER. Therefore, you do not know whether conditions are bad or not?

Mr. RAYMER. They are bad in certain spots; yes, sir.

Mr. BALLINGER. In this district?

Mr. RAYMER. And on further east when we start lapping over into the Chicago area and things like that. We get into a lot of trouble. We are getting a little too far from home then.

Mr. BALLINGER. Have you not made complaints to other parties that there are violations of the Robinson-Patman Act in this territory? Mr. RAYMER. I make it continually to salesmen that call on us. Mr. BALLINGER. Have you made it to people in your industry?

Mr. RAYMER. Not that I know of.

Mr. BALLINGER. Do you know a Mr. Norman Shaffer?

Mr. RAYMER. Yes.

Mr. BALLINGER. What is he-a former president of what?

Mr. RAYMER. The National Leather and Shoe Finders Association. Mr. BALLINGER. He is former president?

Mr. RAYMER. Yes, sir.

Mr. BALLINGER. Did you ever complain to him that there were widespread violations of the Robinson-Patman Act in the Omaha territory?

Mr. RAYMER. Not to my knowledge.

Mr. BALLINGER. And complained bitterly about it?

Mr. RAYMER. Not to my knowledge.

Mr. BALLINGER. You never sold the same quantity of leather on the same day to different parties at different prices; did you?

Mr. RAYMER. I do not imagine that that would ever happen. Of course, we have a quantity discount on rubber and leather, also. Mr. BALLINGER. I said in the same quantity.

Mr. RAYMER. It would always be sold at the same price.

Mr. BALLINGER. You do not exceed the discount allowed under the Fair Trade Act?

Mr. RAYMER. No.

Mr. BALLINGER. In the sale of rubber heels?

Mr. RAYMER. No, sir.

Mr. BALLINGER. That is all.

Chairman PLOESER. Is there anything you might want to volunteer for the information of the committee that might be helpful to the committee in studying this question?

Mr. RAYMER. Of course, we have a schedule on rubber products, if you would care to have that.

Chairman PLOESER. I would like to have it.

Mr. RAYMER. I can furnish that.

Mr. BALLINGER. And your schedule under the Fair Trade Act, your schedule of discounts.

Mr. RAYMER. You mean on quantities?

Mr. BALLINGER. Yes; on quantities.

Mr. RAYMER. Yes.

Chairman PLOESER. We thank you.

(Witness excused.)

TESTIMONY OF THOMAS S. TEDESCO

(The witness was duly sworn and testified as follows:)

Mr. BALLINGER. State your name.

Mr. TEDESCO. Thomas S. Tedesco.

Mr. BALLINGER. You have heard the questions put to Mr. Raymer? Mr. TEDESCO. Yes.

Mr. BALLINGER. Do you think that in this area here there are violations of the Robinson-Patman Act by your competitors?

Mr. TEDESCO. No; not that I know of.

Mr. BALLINGER. Do you think there are?

Mr. TEDESCO. There may be, I do not know; I have never heard of any.

Mr. BALLINGER. Have you ever made any complaints to any parties outside this State that this market suffers from violations of the Robinson-Patman Act?