# Paine Lumber Company v. Neal/Dissent Pitney

* Court Documents
* Case Syllabus
* Opinion of the Court
* Dissenting Opinion Pitney
United States Supreme Court
244 U.S. 459
Paine Lumber Company v. Neal
Argued: May 3 and 4, 1915. ---
Mr. Justice Pitney, with whom concurred Mr. Justice McKenna and Mr. Justice Van Devanter, dissenting:
Appellants, who were complainants below, filed their bill in the United States circuit court (afterwards district court) in the month of February, 1911, to obtain an injunction against the prosecution of a conspiracy to restrain interstate trade and commerce in the products of complainants' woodworking mills, and destroy their interstate business by means of a boycott. The Federal jurisdiction was invoked both on the ground of diverse citizenship and on the ground that the action arose under the Sherman Anti-trust Act of July 2, 1890, chap. 647, 26 Stat. at L. 209, Comp. Stat. 1916, § 8820. Upon the merits, the laws of the state of New York were relied upon, as well as the Federal act. General Business Law of New York, § 340; Penal Law of New York, § 580, subd. 6.
It was found by the district court (212 Fed. 259, 263, 266) that the defendants were engaged in a combination directly restraining competition between manufacturers and operating to restrain interstate commerce, in violation of both Federal and state acts. The circuit court of appeals assumed this to be so (130 C. C. A. 522, 214 Fed. 82), and there is no serious dispute about it here. The district court dismissed the bill, upon the ground that injunctive relief under either statute could be had only at the instance of the United States or the state of New York, as the case might be, and therefore complainants could not have relief in this suit; citing National Fireproofing Co. v. Mason Builders' Asso. 26 L.R.A.(N.S.) 148, 94 C. C. A. 535, 169 Fed. 259, 263. The circuit court of appeals affirmed the decree upon the ground that defendants' acts were not malicious and not directed against the individual complainants personally, and hence relief by injunction could not be granted, irrespective of whether the particular combination in question was obnoxious either to the common law or to the statutes. This decision was rendered on April 7, 1914.
In this court, the prevailing opinion is that, although the facts show a violation of the Sherman Act, a private person cannot maintain a suit for an injunction under its 4th section. I dissent from the view that complainants cannot maintain a suit for an injunction, and I do so not because of any express provision in the act authorizing such a suit, but because, in the absence of some provision to the contrary, the right to relief by injunction, where irreparable injury is threatened through a violation of property rights, and there is no adequate remedy at law, rests upon settled principles of equity that were recongized in the constitutional grant of jurisdiction to the courts of the United States. I think complainants were entitled to an injunction also upon grounds of state law; but will confine what I have to say to the Federal question.
The proofs render it clear that defendants are engaged in a boycotting combination in restraint of intestate commerce prohibited by and actionable under the Sherman Law, on the authority of W. W. Montague & Co. v. Lowry, 193 U.S. 38, 44-48, 48 L. ed. 608, 611-613, 24 Sup. Ct. Rep. 307; Loewe v. Lawlor, 208 U.S. 274, 292, et seq., 52 L. ed. 488, 496, 28 Sup. Ct. Rep. 301, 13 Ann. Cas. 815; Eastern States Retail Lumber Dealers Asso. v. United States, 234 U.S. 600, 614, 58 L. ed. 1490, 1500, L.R.A.1915A, 788, 34 Sup. Ct. Rep. 951; Lawlor v. Loewe, 235 U.S. 522, 534, 59 L. ed. 341, 348, 35 Sup. Ct. Rep. 170. The proof is clear also that the conspiracy is aimed at the property rights of complainants in particular; certainly that it is designed to injure directly and drive out of business a limited class of traders-the so-called 'nonunion' woodworking mills-to which complainants belong; that complainants are sustaining direct and serious injury through the closing of the channels of interstate trade to their products,-an injury quite different from that suffered by the public in general; and that it is a continuing injury not adequately remediable by the ordinary action at law or the action for treble damages under the Sherman Act, and hence is an irreparable injury in the sight of equity. That there is no particular animosity towards complainants as individuals assuming it to be true-is, in my view, a matter of no consequence. If evidence of malice be necessary (and I do not think it is), this is only in the sense that malice consists in the intentional doing of an unlawful act, to the direct damage of another, without just cause or excuse. Brennan v. United Hatters, 73 N. J. L. 729, 744, 9 L.R.A.(N.S.) 254, 118 Am. St. Rep. 727, 65 Atl. 165, 9 Ann. Cas. 698.
Free access to the markets through unobstructed channels of commerce is the very breath of the life of such manufacturing establishments; and to say that complainants are not specially injured by the conduct of defendants seems to me to require that the eyes be closed to the evidence in the case and to the familiar facts of commerce. I do not understand either of the courts below to have held as matter of fact that complainants were not specially injured; but that the district court (212 Fed. 267), while finding in fact that complainants were directly injured, reasoned (erroneously, as I think) that it was not such special injury as was contemplated by certain New York decisions cited.
Section 1 of the Sherman Act declares that every combination or conspiracy in restraint of trade or commerce among the several states or with foreign nations is illegal, and imposes a punishment of fine or imprisonment upon the guilty parties. It clearly recognizes, what is well known, that injury to other traders and competitors is the primary effect of such a combination. A right of action for damages by a party specially aggrieved would have followed by implication (Texas & P. R. Co. v. Rigsby, 241 U.S. 33, 39, 60 L. ed. 874, 877, 36 Sup. Ct. Rep. 482); and it was doubtless because treble damages were to be allowed that an express authorization of suit at law was included in the act. § 7.
The 4th section provides: 'The several circuit courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this act; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney-General, to institute proceedings in equity to prevent and restrain such violations,' etc. The act was designed to be highly remedial, so far as preventing restraints of trade and commerce is concerned, and the semicolon in the sentence just quoted indicates, as I think, that the grant of jurisdiction was intended to be general, and that the following clause was intended to impose a special duty upon the district attorneys to resort to that jurisdiction whenever, in the discretion of the Attorney General, a public prosecution should seem to be called for.
Nor is the omission of an express declaration that persons threatened with special injury through violations of the act may have relief by injunction, of particular significance. Declarations of that character are rarely met within the legislation of Congress. The reason is not far to seek. By § 2 of article 3 of the Constitution, the judicial power is made to extend to 'all cases, in law and equity, arising under this Constitution, the laws of the United States,' etc. This had the effect of adopting equitable remedies in all cases arising under the Constitution and laws of the United States where such remedies are appropriate. The Federal courts, in exercising their jurisdiction, are not limited to the remedies existing in the courts of the respective states, but are to grant relief in equity according to the principles and practice of the equity jurisdiction as established in England. Robinson v. Campbell, 3 Wheat. 212, 221, 223, 4 L. ed. 372, 375, 376; United States v. Howland, 4 Wheat. 108, 115, 4 L. ed. 526, 528; Irvine v. Marshall, 20 How. 558, 565, 15 L. ed. 994, 998. In United States v. Detroit Timber & Lumber Co. 200 U.S. 321, 339, 50 L. ed. 499, 506, 26 Sup. Ct. Rep. 282, the court, by Mr. Justice Brewer, declared: 'It is a mistake to suppose that for the determination of equities and equitable rights we must look only to the statutes of Congress. The principles of equity exist independently of and anterior to all Congressional legislation, and the statutes are either annunciations of those principles or limitations upon their application in particular cases.'
To speak accurately, it is not the statute that gives a right to relief in equity, but the fact that in the particular case the threatening effects of a continuing violation of the statute are such as only equitable process can prevent. The right to equitable relief does not depend upon the nature or source of the substantive right whose violation is threatened, but upon the consequences that will flow from its violation. As the court, by Mr. Justice Field, declared in Holland v. Challen, 110 U.S. 15, 25, 28 L. ed. 52, 56, 3 Sup. Ct. Rep. 495: 'If the controversy be one in which a court of equity only can afford the relief prayed for, its jurisdiction is unaffected by the character of the questions involved.'
To take a familiar example: The Constitution of the United States does not declare in terms that infringements of the rights thereby secured may be prevented by injunction. Ordinarily they may not be. It is only where a threatened infringement will produce injury and damage for which the law can afford no remedy such, for instance, as irreparable and continuing damage, or a multiplicity of suits-that resort may be had to equity; and when this does appear, the right to an injunction arises because that is the only appropriate relief. Osborn v. Bank of United States, 9 Wheat. 738, 838-845, 6 L. ed. 204, 228, 229; Pennoyer v. McConnaughy, 140 U.S. 1, 12, 18, 35 L. ed. 363, 366, 368, 11 Sup. Ct. Rep. 699; Fargo v. Hart, 193 U.S. 490, 503, 48 L. ed. 761, 767, 24 Sup. Ct. Rep 498.
So, tax laws rarely, if ever, contain express authorization of an injunction to restrain illegal taxes. And a suit in equity will not lie on the mere ground that a tax is illegal. But if, in addition, enforcement of the tax would lead to a multiplicity of suits, or produce irreparable injury, or if the property taxed is real estate and the tax throws a cloud upon the title, equity will interfere by injunction. Dows v. Chicago, 11 Wall. 108, 112, 20 L. ed. 65, 67; Hannewinkle v. Georgetown, 15 Wall. 547, 21 L. ed. 231; Union P. R. Co. v. Cheyenne (Union P. R. Co. v. Ryan) 113 U.S. 516, 525, 28 L. ed. 1098, 1101, 5 Sup. Ct. Rep. 601; Pacific Exp. Co. v. Seibert, 142 U.S. 339, 348, 35 L. ed. 1035, 1038, 3 Inters. Com. Rep. 810, 12 Sup. Ct. Rep. 250; Ogden City v. Armstrong, 168 U.S. 224, 237, 42 L. ed. 444, 451, 18 Sup. Ct. Rep. 98; Ohio Tax Cases, 232 U.S. 576, 587, 58 L. ed. 738, 743, 34 Sup. Ct. Rep. 372.
The fact that the threatened invasion of plaintiff's rights will amount at the same time to an offense against the criminal laws is no bar to relief by injunction at the instance of a private party. Re Debs, 158 U.S. 564, 593, 39 L. ed. 1092, 1105, 15 Sup. Ct. Rep. 900.
I find nothing in the letter or policy of the Sherman Act to exclude the application of the ordinary principles of equity, recognized in the constitutional grant of jurisdiction. Applying them to the facts of the present case, appellants are entitled to an injunction to restrain the threatened, continuing, and irreparable injury and damage that otherwise will result from defendants' violation of the act.
The special duty imposed upon the Attorney General and the district attorneys is not inconsistent with this view. The field to be covered by such public prosecutions, and the objects sought thereby, are quite different from the scope and effect of an injunction granted to a private party threatened with special and irreparable injury to his property rights through a violation of the act. The proceeding by the district attorney is a kind of equitable quo warranto, calculated to bring the entire combination to an end, whether it be in the form of a corporation or otherwise. But there may be and are cases of direct and irreparable injury to private parties resulting from violations of the act, not capable of being redressed through actions at law under § 7; and justice to the parties aggrieved requires that the act be construed, if the language admits of such a construction (and I think it does), so as to allow an injunction to prevent irreparable injury to a private party, otherwise remediless, without going to the extent of dissolving the combination altogether, which in some cases might not be a matter of public interets or importance. Unless so construed, the act must operate in many instances to deprive parties of a right of injunction that they would have had without it. So far, at least, as boycotting combinations are concerned, and this case is of that character,-the act creates no new offense and gives no new right of action. Temperton v. Russell [1893] 1 Q. B. 715, 62 L. J. Q. B. N. S. 412, 4 Reports, 376, 69 L. T. N. S. 78, 41 Week. Rep. 565, 57 J. P. 676; Quinn v. Leathem [1901] A. C. 495, 1 B. R. C. 197, 70 L. J. P. C. N. S. 76, 65 J. P. 708, 50 Week. Rep. 139, 85 L. T. N. S. 289, 17 Times L. R. 749; Barr v. Essex Trades Council, 53 N. J. Eq. 101, 112-121, 30 Atl. 881; George Jonas Glass Co. v. Glass Bottle Blowers' Asso. 77 N. J. Eq. 219, 225, 41 L.R.A.(N.S.) 445, 79 Atl. 262.
I find no controlling decision in this court. Minnesota v. Northern Securities Co. 194 U.S. 48, 71, 48 L. ed. 870, 881, 24 Sup. Ct. Rep. 598, is not an authority against the right of complainants to an injunction to prevent special and irreparable damage to their property rights through a violation of the Sherman Act; the effect of that decision being merely to deny relief by injunction to individuals not directly and specially injured. There the state of Minnesota sued in one of its own courts under certain statutes of its own, as well as under the Sherman Act, and the case was removed to the United States circuit court as being one arising under the Constitution and laws of the United States. The purpose of the suit was to annul an agreement and suppress a combination alleged to exist between the defendant railroad corporations; and the only threatened injury because of which an injunction was prayed was that the state, being the owner of large tracts of land whose value depended upon free and open competition over the lines of railway involved in the combination, and being the owner of certain public institutions whose supplies must, of necessity, be shipped over the same railways, it was alleged that the successful maintenance of these institutions as well as the performance by the state of its governmental functions depended largely upon the value of real and personal property situate within the state and the general prosperity and business success of its citizens, and that these in turn depended upon maintaining free and unrestricted competition between the railway lines involved. The court, by Mr. Justice Harlan, said (p. 70) that the threatened injury was at most only remote and indirect, and such as would come alike, although in different degrees, to every individual owner of property in a state by reason of the suppression of free competition between interstate carriers, and was 'not such a direct, actual injury as that provided for in the 7th section of the statute;' and that upon the view contended for, 'every individual owner of property in a state may, upon like general grounds, by an original suit, irrespective of any direct or special injury to him [Italics mine], invoke the original jurisdiction of a circuit court of the United States, to restrain and prevent violations of the Antitrust Act of Congress.' It was said further (p. 71): 'Taking all the sections of that act together, we think that its intention was to limit direct proceedings in equity to prevent and restrain such violations of the Anti-trust Act as cause injury to the general public, or to all alike, merely from the suppression of competition in trade and commerce among the several states and with foreign nations, to those instituted in the name of the United States Congress was that, by such a limitation upon suits in equity of a general nature, to restrain violations of the act, irrespective of any direct injury sustained by particular persons or corporations, interstate and international trade and commerce and those carrying on such trade and commerce, as well as the general business of the country, would not be needlessly disturbed by suits brought, on all sides and in every direction, to accomplish improper or speculative purposes.' [Italics mine.] The reasoning manifestly proceeds upon the assumption that individuals sustaining direct and irreparable injury through a continuing violation of the act would be entitled to an injunction.
D. R. Wilder Mfg. Co. v. Corn Products Ref. Co. 236 U.S. 165, 174, 175, 59 L. ed. 520, 525, 526, 35 Sup. Ct. Rep. 398, Ann. Cas. 1916A, 118, is not in point. There plaintiff in error, which had purchased, received, and consumed goods from defendant in error, defended a suit for the price upon the ground that defendant in error was an illegal combination in violation of the Sherman Act, and therefore could not sue to recover for goods sold with direct reference to and in execution of agreements that had for their object and effect the accomplishment of the illegal purposes of the combination. The court held that an individual could not defend a suit brought against him on his otherwise legal contract by asserting that the corporation or combination suing had no legal existence because of its violations of the act, the statute having cast upon the Attorney General of the United States the responsibility of enforcing its provisions in that regard.
The question whether private parties threatened with injury through violations of the Sherman Act might (prior to the Clayton Act of October 15, 1914, chap. 323, § 16, 38 Stat. at L. 730, 737, Comp. Stat. 1916, §§ 8835a, 8835o) have relief by injunction is one upon which the lower Federal courts are not in accord. In the present case, the district court, in dismissing the bill upon the ground that relief by injunction might be had only at the instance of the United States (212 Fed. 259, 266), merely cited and relied upon National Fireproofing Co. v. Mason Builders' Asso. 26 L.R.A.(N.S.) 148, 94 C. C. A. 535, 169 Fed. 259, 263. That case was decided upon the authority of Greer, M. & Co. v. Stoller, 77 Fed. 1, 3, and Southern Indiana Exp. Co. v. United States Exp. Co. 88 Fed. 659, 663. Reference was made also to E. Bement & Sons v. National Harrow Co. 186 U.S. 70, 87, 88, 46 L. ed. 1058, 1067, 1068, 22 Sup. Ct. Rep. 747, where the point was assumed arguendo; Post v. Southern R. Co. 103 Tenn. 184, 228, 55 L.R.A. 481, 52 S. W. 301, where it was ruled on the authority of 86 Fed. 407 and 88 Fed. 659, 663; and the following cases in the Federal courts: Blindell v. Hagan (C. C.) 54 Fed. 40, 41; Hagan v. Blindell (C. C. A.) 6 C. C. A. 86, 13 U.S. App. 354, 56 Fed. 696; Pidcock v. Harrington (C. C.) 64 Fed. 821; Gulf, C. & S. F. R. Co. v. Miami S. S.C.o. (C. C. A.) 30 C. C. A. 142, 52 U.S. App. 732, 86 Fed. 407, 420; Block v. Standard Distilling & Distributing Co. (C. C.) 95 Fed. 978; and Metcalf v. American School-Furniture Co. (C. C.) 108 Fed. 909. An examination of these cases (including Greer v. Stoller and Southern Indiana Exp. Co. v. United States Exp. Co. supra) discloses that Blindell v. Hagan, 54 Fed. 40, 41, is the source from which all the others derive the only authority they have for the doctrine that, under the Sherman Act, the remedy by injunction was available to the government only. But one or two of the cases contain any reasoning upon the question, and that is meager and unsatisfactory.
Moreover, so far as these cases have held that private parties could have no injunction for a violation of the Sherman Act (some of them have not so held), the real ground of decision in Blindell v. Hagan was misunderstood. In that case the jurisdiction of the Federal court was invoked upon the ground of the alienage of complainants, defendants being citizens of the state of Louisiana, and also upon the ground that defendants were engaged in a combination in restraint of trade between New Orleans and Liverpool, contrary to the prohibition of the Sherman Act. The circuit court, in declining to allow an injunction under the act, said: 'This act makes all combinations in restraint of trade or commerce unlawful, and punishes them by fine or imprisonment, and authorizes suits at law for triple damages for its violation, but it gives no new right to bring a suit in equity, and a careful study of the act has brought me to the conclusion that suits in equity or injunction suits by any other than the government of the United States are not authorized by it.' Evidently this was intended to be confined to the question of an express authorization of an injunction for a mere violation of the act, for the court proceeded to grant preventive relief on the ground that there was jurisdiction because of the citizenship of the parties, and that under the ordinary equity jurisdiction an injunction should issue because of the threatened irreparable injury and the inadequacy of pecuniary compensation, and in order to prevent a multiplicity of suits. Upon appeal the decree was affirmed, upon the grounds expressed by the court below (6 C. C. A. 86, 13 U.S. App. 354, 56 Fed. 696). Since there was no infringement of complainants' rights except through a combination in restraint of foreign trade, as to which manifestly the Sherman Act furnished the exclusive rule of law, the effect of the decision is to allow an injunction to one injured through a violation of that act if he show in addition the ordinary grounds for resorting to equity, such as the probability of irreparable mischief, the inadequacy of a pecuniary compensation, or the necessity of preventing a multitude of suits.
So, in Bigelow v. Calumet & H. Min. Co. (C. C.) 155 Fed. 869, 876, the court, after reviewing the previous decisions, declared (p. 877): 'They do not commend themselves to my judgment so far as they deny the right of a private party, who has sustained special injury by the violation of the Anti-trust Act, to relief by injunction under the general equity jurisdiction of the court. As already seen, the cases referred to do not generally announce such rule.'
Aside from their rights under the Act of 1890 [26 Stat. at L. 209, chap. 647, Comp. Stat. 1916, § 8820], I think appellants are now entitled to an injunction under § 16 of the Clayton Act,-the case clearly being within the terms of the section, notwithstanding the act took effect after the final decree in the district court. In an equity suit for injunction the reviewing court should decide the case according to the law as it exists at the time of its decision. This is not giving a retrospective effect to the new statute, for the relief granted operates only in futuro.
The suggestion, in behalf of defendants, that § 6 of the Clayton Act establishes a policy inconsistent with relief by injunction in such a case as the present, by making legitimate any acts or practices of labor organizations or their members that were unlawful before, is wholly inadmissible. The section prohibits restraining members of such organizations from 'lawfully carrying out the legitimate objects thereof.' What these are is indicated by the qualifying words: 'Instituted for the purpose of mutual help, and not having capital stock or conducted for profit.' But these are protected only when 'lawfully carried out.' The section safeguards these organizations while pursuing their legitimate objects by lawful means, and prevents them from being considered, merely because organized, to be illegal combinations or conspiracies in restraint of trade. The section, fairly construed, has no other or further intent or meaning. A reference to the legislative history of the measure confirms this view. House Rep. No. 627, 63d Cong. 2d Sess. pp. 2, 14-16; Senate Rep. No. 698, 63d Cong. 2d Sess. pp. 1, 10, 46. Neither in the language of the section, nor in the committee reports, is there any indication of a purpose to render lawful or legitimate anything that before the act was unlawful, whether in the objects of such an organization or its members or in the measures adopted for accomplishing them.
It is altogether fallacious, I think, to say that what is being done by the present defendants is done only for the purpose of strengthening the union. Conceding this purpose to be lawful, it does not justify or excuse the resort to unlawful measures for its accomplishment. A member of a labor union may refuse to work with nonunion men, but this does not entitle him to threaten manufacturers for whom he is not working, and with whom he has no concern, with loss of trade and a closing of the channels of interstate commerce against their products if they do not conduct their business in a manner satisfactory to him.
And the suggestion that, before the Clayton Act, unlawful practices of this kind were usually and notoriously resorted to by labor unions, and that for this reason Congress must have intended to describe them as 'legitimate objects,' and thus render lawful what before was unlawful, is a libel upon the labor organizations and a serious impeachment of Congress.
Nor can I find in § 20 of the Clayton Act anything interfering with the right of complainants to an injunction. It refers only to cases 'between an employer and employees, or between employers and employees, or between employees, or between persons employed and persons seeking employment, involving, or growing out of, a dispute concerning terms or conditions of employment.' These words evidently relate to suits arising from strikes and similar controversies, and the committee reports upon the bill bear out this view of the scope of the section. But this is not such a suit. There is no relation of employer and employee, either present or prospective, between the parties in this case Defendants who are employees are in one branch of industry in New York city; complainants are employers of labor in another branch of industry in distant states. Nor is there any dispute between them concerning terms or conditions of employment. Section 20 prohibits an injunction restraining any person 'from ceasing to patronize or to employ any party to such dispute, or from recommending, advising, or persuading others by peaceful and lawful means so to do; . . . or from peaceably assembling in a lawful manner, and for lawful purposes; or from doing any act or thing which might lawfully be done in the absence of such dispute by any party thereto.'
Clearly, this provision is limited to the participants in a dispute of the character just indicated. And, quite as clearly, only 'lawful' measures are sanctioned,-that is, of course, measures that were lawful before the act. There is no grant, in terms or by necessary inference, of immunity in favor of a boycott of traders in interstate commerce, violative of the provisions of the Sherman Act, to which the Clayton Act is supplemental.
Mr. Justice McKenna and Mr. Justice Van Devanter concur in this dissent.
Mr. Justice McReynolds also dissents.

## Notes

* ↑ Sec. 16 of the so-called Clayton Act of October 15, 1914, chap. 323, 38 Stat. at L. 730, 737, Comp. Stat. 1916, §§ 8835a, 8835o, contains such a provision; but this was inserted only because some of the Federal courts had held-erroneously, as I think-that private parties could have no relief by injunction against threatened violations of the Sherman Act. These decisions will be discussed below.
* ↑ 'Sec. 6. That the labor of a human being is not a commodity or article of commerce. Nothing contained in the anti-trust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the purposes of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof, he held or construed to be illegal combinations or conspiracies in restraint of trade, under the anti-trust laws.'
This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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