Source: https://www.legalcrystal.com/case/94723/cline-vs-frink-dairy-co
Timestamp: 2019-04-25 04:26:06+00:00

Document:
1. A federal court of equity may enjoin state criminal proceedings under a statute alleged to be unconstitutional when their prevention is essential to the safeguarding of rights of property, and when the circumstances are exceptional and the danger of irreparable loss is both great and immediate. P. 274 U. S. 451 .
2. The injunction cannot be supported, however, insofar as it embraces proceedings pending in the state criminal court which were instituted before the suit was begun. P. 274 U. S. 452 .
3. The Due Process Clause of the Fourteenth Amendment imposes upon the states the obligation of so framing their criminal statutes that those to whom they are addressed may know what standard of conduct is intended to be required. P. 274 U. S. 458 .
4. The Colorado Anti-Trust Law denounces and punishes conspiracies and combinations, in restraint of trade; to fix prices, prevent competition, etc., except when necessary in order to enable participants to obtain a reasonable profit from products dealt in, etc. Held that the exception leaves the statute without a fixed standard of guilt, rendering it void. P. 274 U. S. 453 .
Appeal from a decree of the district court, three judges sitting, permanently enjoining the appellant district attorney from enforcing the Colorado Anti-Trust Law against the plaintiff dairy corporations and individuals.
City and County of Denver, Colorado.
year. It avers that the three dairy companies have been separately conducting for years, in Denver, Colorado, and its vicinity, the sale and distribution of milk, butter, and all manner of dairy products; that each has invested in its business more than $100,000; that they are also engaged in interstate commerce, buying and selling from without the limits of the state; that the individual plaintiffs, Connon, Frink, and Morrison, are respectively officers and stockholders of the three plaintiff companies; that McClintock, the other individual plaintiff, is an officer and stockholder of the Beatrice Creamery Company, a corporation of Delaware, also in the dairy business in Denver; that the individual plaintiffs, experienced dairymen, by painstaking effort, fair dealing, and careful management, have gained thousands of customers and a well established trade, and that their companies, in addition to their tangible property and assets, have good wills of great value. The bill sets out in full the Colorado antitrust law, which punishes as a crime combinations of persons and corporations to restrain trade or commerce, with certain exceptions, and makes it the duty of the defendant, the district attorney, to prosecute alleged violations thereof, and to institute actions for forfeiture of charters of associations engaged therein. All contracts violating the act are avoided; violation of the act is made a good defense to a suit for merchandise that was sold in pursuance of a combination under it, and a right of action for damages against the combiners is given to anyone injured by the combination. One charge of the bill, among others, is that the act violates the Fourteenth Amendment of the Constitution in that it deprives the plaintiffs of their liberty without due process of law because it is indefinite and uncertain, and fails to fix any informing standard of criminality.
County, has been, and still is, claiming that the plaintiffs and their competitors have been and now are acting in violation of the antitrust law; that he has caused an information to be filed in the criminal division of the District Court of the City and County of Denver, in which the plaintiffs and the Beatrice Creamery Company, a Delaware corporation, are charged with conspiracy to violate the Anti-Trust Act; that he expects to press the case to trial; that, since the case was instituted the grand jury has been in session, and many witnesses summoned and questioned about the plaintiffs' milk business; that the defendant Cline has threatened to, and, unless restrained by the court will, institute further prosecutions, file further informations, and attempt to procure indictments of the plaintiffs by the grand jury, and that Cline, by this multiplicity of criminal suits and prosecutions, as well as by the civil suits for forfeiture of the corporate plaintiffs' charters he has threatened to bring, has already inflicted serious loss to the businesses and properties of the plaintiffs, and that they will be irreparably and immeasureably damaged thereby unless he is restrained.
A motion to dismiss was made by the defendant on the ground that the bill presented no case for equitable relief. On the hearing before the three judges, a preliminary injunction was issued and the motion to dismiss was denied. The defendant standing upon his motion to dismiss and declining to plead further, a decree for a permanent injunction was entered, and this is an appeal from that decree.
before it; but an exception to this rule exists when the prevention of such prosecutions under alleged unconstitutional enactments is essential to the safeguarding of rights of property and when the circumstances are exceptional and the danger of irreparable loss is both great and immediate. Fenner v. Boykin, 271 U. S. 240 , 271 U. S. 243 ; Packard v. Banton, 264 U. S. 140 ; Hygrade Provision Co. v. Sherman, 266 U. S. 497 , 266 U. S. 502 ; Terrace v. Thompson, 263 U. S. 197 , 263 U. S. 214 ; Ex parte Young, 209 U. S. 123 ; Davis & Farnum Mfg. Co. v. Los Angeles, 189 U. S. 207 , 189 U. S. 218 ; Dobbins v. Los Angeles, 195 U. S. 223 , 195 U. S. 236 , 195 U. S. 241 ; In re Sawyer, 124 U. S. 200 , 124 U. S. 209 , 124 U. S. 211 .
The affidavits in support of the bill were very full in their showing that the district attorney, by his action and threats, had already greatly injured their properties and their businesses. They present a case in which the question of the validity of the act under which, if invalid, great injuries to properties and businesses are being unjustly inflicted should be promptly settled. We think the basis for equitable jurisdiction is made sufficiently clear.
"It would seem that, if there were jurisdiction in a court of equity to enjoin the invasion of property rights through the instrumentality of an unconstitutional law, that jurisdiction would not be ousted by the fact that the state had chosen to assert its power to enforce such law by indictment or other criminal proceeding."
"It is further objected (and the objection really forms part of the contention that the state cannot be sued) that a court of equity has no jurisdiction to enjoin criminal proceedings, by indictment or otherwise, under the state law. This, as a general rule, is true. But there are exceptions. When such indictment or proceeding is brought to enforce an alleged unconstitutional statute which is the subject matter of inquiry in a suit already pending in a federal court, the latter court, having first obtained jurisdiction over the subject matter, has the right, in both civil and criminal cases, to hold and maintain such jurisdiction, to the exclusion of all other courts until its duty is fully performed. Prout v. Starr, 188 U. S. 537 , 188 U. S. 544 . But the federal court cannot, of course, interfere in a case where the proceedings were already pending in a state court. Taylor v. Taintor, 16 Wall. 366, 83 U. S. 370 ; Harkrader v. Wadley, 172 U. S. 148 ."
We therefore agree with the view of the dissenting judge that the injunction is too broad insofar as it restrains proceedings actually pending, and that it must be accordingly modified.
"That it is hereby made unlawful for any person willfully . . . to make any unjust or unreasonable rate or charge in handling or dealing in or with any necessaries; to conspire, combine, agree, or arrange with any other person, . . . to exact excessive prices for any necessaries. . . . Any person violating any of the provisions of this § upon conviction thereof shall be fined not exceeding $5,000 or be imprisoned for not more than two years, or both."
"The sole remaining inquiry therefore is the certainty or uncertainty of the text in question -- that is, whether the words,"
"That it is hereby made unlawful for any person willfully . . . to make any unjust or unreasonable rate or charge in handling or dealing in or with any necessaries"
that to attempt to enforce the section would be the exact equivalent of an effort to carry out a statute which in terms merely penalized and punished all acts detrimental to the public interest when unjust and unreasonable in the estimation of the court and jury."
The opinion cites in support of its conclusion United States v. Reese, 92 U. S. 214 , 92 U. S. 219 -220; United States v. Brewer, 139 U. S. 278 , 139 U. S. 288 ; Todd v. United States, 158 U. S. 278 , 158 U. S. 282 ; United States v. Sharp, 27 Fed.Cas. 1041, 1043, No. 16,264; Chicago & Northwestern Ry. Co. v. Dey, 35 F. 866, 876; Tozer v. United States, 52 F. 917, 919, 920; United States v. Capital Traction Co., 34 App.D.C. 592; United States v. Pennsylvania R. Co., 242 U. S. 208 , 242 U. S. 237 -238; also International Harvester Co. v. Kentucky, 234 U. S. 216 , 234 U. S. 221 ; Collins v. Kentucky, 234 U. S. 635 , 234 U. S. 637 ; American Seeding Machine Co. v. Kentucky, 236 U. S. 660 , 236 U. S. 662 .
"And all such combinations are hereby declared to be against public policy, unlawful and void; provided, that no agreement or association shall be deemed to be unlawful or within the provisions of this act, the object and purposes of which are to conduct operations at a reasonable profit or to market at a reasonable profit those products which cannot otherwise be so marketed; provided further that it shall not be deemed to be unlawful, or within the provisions of this act for persons, firms, or corporations engaged in the business of selling or manufacturing commodities of a similar or like character to employ, form, organize, or own any interest in any association, firm, or corporation having as its object or purpose the transportation, marketing or delivering of such commodities. . . ."
between lawfulness and criminality to depend upon, first, what commodities need to be handled according to the trust methods condemned in the first part of the act to enable those engaged in dealing in them to secure a reasonable profit therefrom; second, to determine what generally would be a reasonable profit for such a business; and, third, what would be a reasonable profit for the defendant under the circumstances of his particular business. It would therefore be a complete defense for the defendant to prove in this case that it is impossible to sell milk or milk products except by trust methods and make a reasonable profit if he also showed that, by such methods, he had in fact only made a reasonable profit.
reduce it below what would be reasonable would tax the human ingenuity in much the same way as that which this Court refused to allow as a proper standard of criminality in International Harvester Co. v. Kentucky, 234 U. S. 216 , 234 U. S. 222 =223.
The Cohen case was a violation of a federal law, and involved the Fifth and Sixth Amendments, the first providing that no person shall be deprived of life, liberty, or property without due process of law, and the second that in all criminal prosecutions the accused shall enjoy the right to be informed of the nature and cause of the accusation. We are now considering a case of state legislation and threatened prosecutions in a state court, where only the Fourteenth Amendment applies, but that requires that there should be due process of law and this certainly imposes upon a state an obligation to frame its criminal statutes so that those to whom they are addressed may know what standard of conduct is intended to be required. And such is the effect of our cases. Connally v. General Construction Co., 269 U. S. 385 ; International Harvester Co. v. Kentucky, 234 U. S. 216 ; Collins v. Kentucky, 234 U. S. 364 ; American Seeding Machine Co. v. Kentucky, 236 U. S. 660 ; Waters-Pierce Oil Co. v. Texas, 212 U. S. 86 ; Fox v. Washington, 236 U. S. 273 ; Omaechevarria v. Idaho, 246 U. S. 343 ; Miller v. Strahl, 239 U. S. 426 ; Tedrow v. Lewis & Son Co., 255 U. S. 98 ; Weeds, Inc. v. United States, 255 U. S. 109 , and Kinnane v. Detroit Creamery Co., 255 U. S. 102 .
"That the terms of a penal statute creating a new offense must be sufficiently explicit to inform those who are subject to it what conduct on their part will render them liable to its penalties is a well recognized requirement, consonant alike with ordinary notions of fair play and the settled rules of law, and a statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law. . . ."
of the statutes involved or the subjects with which they dealt, a standard of some sort was afforded."
The chief authority upon which counsel for the appellant rely is the case of Nash v. United States, 229 U. S. 373 , 229 U. S. 376 . That case involved the question whether the Sherman Anti-Trust Law, in making criminal every contract and all monopolies in restraint of interstate trade or commerce, fixed a permissible and ascertainable standard of guilt. It was held that it did. Because this Colorado act is an antitrust law, punishing with even more detail of description all combinations in restraint of trade in Colorado, with the excepting provisos, it is supposed that the Nash case has direct application. and supports the claim of validity for the act. It is first to be noted that the Court, in its consideration of the Cohen case, had before it the Nash case, and found nothing in that case inconsistent with its Cohen case ruling.
"The conditions are as permanent as anything human, and a great body of precedents on the civil side, coupled with familiar practice, make it comparatively easy . . . to keep to what is safe."
or conspiracy in restraint of interstate trade to be illegal. and everyone taking part in it to be guilty of a misdemeanor. In United States v. Trans-Missouri Freight Association, 166 U. S. 290 , and United States v. Joint Traffic Association, 171 U. S. 505 , the opinions of the Court left the impression among many that every contract in restraint of trade, no matter whether lawful and reasonable or void and unenforceable at common law, was within the penalty of the statute. Such a conclusion was not necessary to the decision, and it was quite evident, when the opinions were analyzed, that it was recognized in their text that there were incidental restraints of trade that the statute was not intended to cover. This was made clear by the later decision in Cincinnati Packet Co. v. Bay, 200 U. S. 179 . The view was fully confirmed in United States v. Standard Oil Co., 221 U. S. 1 , and United States v. American Tobacco Co., 221 U. S. 1 06, where the language of the federal statute was read in the light of the common law, and in accordance with its reason, and was construed not to penalize such partial restraints of trade as at common law were not only permitted, but were promoted in the interest of the freedom of trade itself.
The review of the many common law precedents as to due and undue restraints of trade shows that in only one or two cases, and those not well considered, was there left to the court or jury as a criterion of the validity of a restraint of trade the reasonableness of the prices fixed or the profit realized under it.
one, because, as already stated, we do not think that, at common law, there is any question of reasonableness open to the courts with reference to such a contract."
"But these cases all involved contracts in which the covenant in restrain of trade was ancillary to the main and lawful purpose of the contract, and was necessary to the protection of the covenantee in the carrying out of that main purpose. They do not manifest any general disposition on the part of the courts to be more liberal in supporting contracts having their sole object the restraint of trade than did the courts of an earlier time. It is true that there are some cases in which the courts, mistaking, as we conceive, the proper limits of the relaxation of the rule for determining the unreasonableness of restraints of trade, have set sail on a sea of doubt, and have assumed the power to say, in respect to contracts which have no other purpose and no other consideration on either side than the mutual restraint of the parties, how much restraint . . . is in the public interest, and how much is not. The manifest danger in the administration of justice according to so shifting, vague, and indeterminate a standard would seem to be a strong reason against adopting it."
today may, through economic and business changes, become the unreasonable price of tomorrow. Once established, it may be maintained unchanged because of the absence of competition secured by the agreement for a price reasonable when fixed. Agreements which create such potential power may well be held to be in themselves unreasonable or unlawful restraints without the necessity of minute inquiry whether a particular price is reasonable or unreasonable as fixed and without placing on the government in enforcing the Sherman law the burden of ascertaining from day to day whether it has become unreasonable through the mere variation of economic conditions. Moreover, in the absence of express legislation requiring it, we should hesitate to adopt a construction making the difference between legal and illegal conduct in the field of business relations depend upon so uncertain a test as whether prices are reasonable -- a determination which can be satisfactorily made only after a complete survey of our economic organization and a choice between rival philosophies."
This review showing what was the standard of criminality in the federal antitrust law indicates clearly that the decision in the Cohen Grocery case was not inconsistent with the Nash case, because the latter did not relate to the reasonableness or excessiveness of prices charged for necessaries without more as a basis for criminality, while the former plainly did. The same reasons show that there is nothing inconsistent between the Cohen case and that of Waters-Pierce Oil Co. v. Texas, 212 U. S. 86 .
"But, apart from the common law as to restraint of trade thus taken up by the statute, the law is full of instances where a man's fate depends on his estimating rightly -- that is, as the jury subsequently estimates it -- some matter of degree. If his judgment is wrong, not only may he incur a fine or a short imprisonment, as here; he may incur the penalty of death. 'An act causing death may be murder, manslaughter, or misadventure, according to the degree of danger attending it' by common experience in the circumstances known to the actor. . . . 'The criterion in such cases is to examine whether common social duty would under the circumstances, have suggested a more circumspect conduct.' 1 East, P.C. 262."
"Every person operating a motor vehicle on the public highways of this state shall drive the same in a careful and prudent manner, not to exceed thirty miles per hour, and within the limit of incorporated cities and towns not to exceed twenty miles per hour, and at intersections and school houses not to exceed twelve miles per hour, and in no case at a rate of speed that will endanger the property of another, or the life and limb of any person."
Chapter 371, General Laws of Oregon 1921, § 2, subdivision 16.
The indictment was framed under the last clause of this statute. Such standard for the driver of an automobile on a highway is one to which it is neither harsh nor arbitrary to hold those criminally who operate such a possibly dangerous instrument of locomotion, and who are or ought to be aware of what degree of care is necessary to avoid injury to others under the conditions that prevail on a highway. See Hess v. Pawloski, ante, p. 274 U. S. 352 .
But it will not do to hold an average man to the peril of an indictment for the unwise exercise of his economic or business knowledge, involving so many factors of varying effect that neither the person to decide in advance nor the jury to try him after the fact can safely and certainly judge the result. When to a decision whether a certain amount of profit in a complicated business is reasonable is added that of determining whether detailed restriction of particular antitrust legislation will prevent a reasonable profit in the case of a given commodity, we have an utterly impracticable standard for a jury's decision. A legislature must fix the standard more simply and more definitely before a person must conform or a jury can act.
We conclude that the antitrust statute of Colorado is void, in that those who are prosecuted and convicted under it will be denied due process of law.
The decree of district court to enjoin proceedings which the defendant threatens to bring under the act against the plaintiffs should be affirmed, but the decree below is modified and reversed so far as it purports to enjoin the defendant from proceeding further in prosecuting the information under that act against the plaintiffs now pending in the state criminal court.

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