In the Matter of the Complaint Against CIGARETTE SALES, INC., at Fayetteville, North Carolina 28302 P.S. Docket No. 1/156November 8, 1972
William A. Duvall Chief Administrative Law Judge
APPEARANCES: Nancy R. Dorsch, Esq. Consumer Protection Division United States Postal Service Washington, D.C. 20260 for the Complainant Edward J. David, Esq. Downing, David & Vallery 110-1/2 Gillespie Street Fayetteville, North Carolina 28301 for the Respondent
This proceeding was initiated by the filing on August 24, 1972, of a complaint by the Postal Service, through its Consumer Protection Office, in which it is alleged that Cigarette Sales, Inc. at Fayetteville, North Carolina, the Respondent, is engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations contrary to the provisions of Section 3005 of Title 39 U. S. Code.
The Complainant alleges that the scheme consists of the sale of cigarettes through the mails upon the basis of false representations.
At the hearing, the Complainant presented Inspector Michael Ryan, who conducted the investigation of this case. It was Inspector Ryan's testimony that the price list of the Respondent, showing the various makes and brands of cigarettes and the prices charged for each brand, came to his attention as a result of action by the Government of the State of New York, and particularly, he received the price list from a postal inspector who is domiciled in New York and who is working on a similar problem
After his receipt of the price list, Inspector Ryan ordered, by means of test name, two cartons of cigarettes from the Respondent and he made the required remittance of money. In due time the Inspector received the cigarettes which had been ordered from the Respondent.
There is no indication on the outside of the carton in which the two cartons of cigarettes were mailed, nor on the outside of the individual cartons of cigarettes, nor on the outside of the individual packages of cigarettes, that the state tax of the State of Pennsylvania, the state into which these cigarettes were shipped, has been paid.
From all of the foregoing facts it is clear that the Respondent uses the mails in the conduct of its business of selling cigarettes.
The next question to be considered is whether the Respondent in its price list, which constitutes its advertising material, makes the representations which are set forth in the complaint.
In Complainant's Exhibit 1, which is Respondent's order blank, there are the following statements which are to be made by the purchaser in order to qualify him to purchase the cigarettes.
One statement is, "I am 18 years of age." Another statement is, "Cigarettes are for my personal use."
In addition to those statements, there are various prices given for various quantities of cartons of cigarettes of various brands.
At the top of Complainant's Exhibit 1 there is the name of the Respondent and the Respondent's address.
If a fair interpretation is put upon the statements contained in Complainant's Exhibit 1, and if that Exhibit is considered in its entirety and in the light of the effect that it would be most likely to produce upon the average reader, as required by the holding of the Court in Donaldson v. Read Magazine , 333 U.S. 178, one must conclude that the Respondent represents, (1) that the total dollar amount for which a prospective purchaser of Respondent's cigarettes is legally responsible is the price shown on the order form, and (2) that fulfillment of requisites of being 18 years of age or older and of purchasing the cigarettes for the personal use of the buyer satisfy all the legal responsibilities of the buyer arising directly out of the purchase.
I find, therefore, that the Respondent does make the representa- tions attributed to it in the complaint.
There remains for determination now the question of whether the representations found to have been made by the Respondent are true or false.
Under Section 376 of Title 15 of the United States Code, any person who sells cigarettes in interstate commerce must file with the Tobacco Tax Administrator of the State into which cigarettes are sold and shipped a statement setting forth his name or trade name and the address of his principal place of business. In addition, he must by the tenth day of each calendar month file with the Tobacco Tax Administrator of each State into which he has made a shipment, a memorandum or a copy of the invoice covering each and every shipment of cigarettes made during the previous calendar month into such state.
In Section 3169.301 of Chapter 72 of Purdon's Pennsylvania Statutes Annotated, there is a requirement that every person pay into the State Treasury the appropriate state tax on all cigarettes received by him in Pennsylvania to which the Pennsylvania cigarette tax stamps have not been previously affixed.
One of the exhibits received in evidence in this proceeding is Complainant's Exhibit Number 8 which consists of an affidavit dated October 20, 1972, signed by Paul Landau, Director of the Bureau of Cigarette and Beverage Taxes, Department of Revenue, Commonwealth of Pennsylvania. This affidavit is relatively short and it reads as follows in its pertinent part:
"1. Cigarette Sales, Inc., Post Office Box 62,
Fayetteville, North Carolina, has never advised the Commonwealth of Pennsylvania that they intend to conduct business within the Commonwealth, and
"2. Cigarette Sales, Inc. have never advised the Commonwealth of Pennsylvania they shipped two (2) cartons of cigarettes to George B. O'Connor, P.O. Box 258, New Berlinville, Pennsylvania 19545, on or about August 1, 1972, for the sum of $3.10 per carton."
It appears, therefore, that a purchaser of cigarettes from the Respondent in response to the price list, which is Complainant's Exhibit 1, is not only liable to the Respondent for the appropriate purchase price of the brand that he wishes to buy, but, also, that the purchase, if he lives in the State of Pennsylvania, is liable to the State of Pennsylvania for payment of the Pennsylvania State taxes on the cigarettes so purchased.
It follows, therefore, that in order legally to be in possession of cigarettes ordered from Respondent that the purchaser must pay the appropriate state tax in Pennsylvania and that he must fulfill other prerequisites than being 18 years of age and purchasing the cigarettes for his own personal use.
Respondent's Counsel has argued that the Postal Service ought not to be in the position of enforcing state tax laws, and I am in agreement with that position. On the other hand, that is not the purpose of the Postal Statute which is found in 39 U.S. Code 3005, nor is it the purpose of this proceeding this morning.
The purpose of the Postal Statute and the purpose of our hearing this morning is to afford protection to the consuming public. They are entitled to be advised as to the entire cost which they must sustain in order legally to purchase the product offered for sale by the Respondent, and it appears on the basis of the record in this case that the purchasers are not so advised.
I find that the representations heretofore found to have been made by the Respondent are materially false as a matter of fact.
Upon the basis of the entire record in this case and the findings heretofore made, I conclude that the Respondent is engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations and that an order as provided in Section 3005 of Title 39 U. S. Code should be issued against this Respondent.
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