Source: https://supreme.justia.com/cases/federal/us/234/216/
Timestamp: 2019-04-25 03:53:44+00:00

Document:
An antitrust criminal law may not necessarily be unconstitutional merely because it throws upon men the risk of rightly estimating what is an undue restraint of trade, but to compel a man to guess what the fair market value of commodities manufactured or sold by him would be under other than existing conditions is beyond constitutional limits.
The antitrust provision of the Constitution of 1891 and of the Acts of 1900 and 1906 of Kentucky, as construed by the highest court of that state, are unconstitutional under the Fourteenth Amendment as offering no standard of conduct that it is possible to know in advance and comply with. 147 Ky. 564; id., 795; 148 Ky. 572, reversed.
The facts, which involve the constitutionality of antitrust provisions of the constitution and laws of Kentucky, are stated in the opinion.
The plaintiff in error was prosecuted, convicted, and fined in three different counties for having entered into an agreement with other named companies for the purpose of controlling the price of harvesters, etc., manufactured by them, and of enhancing it above their real value, and for having so fixed and enhanced the price, and for having sold their harvesters, etc. at a price in excess of their real value, in pursuance of the agreement alleged. The judgments were affirmed by the Court of Appeals. 147 Ky. 564, id., 144 Ky. 795, 148 Ky. 572. The plaintiff in error saved its rights under the Fourteenth Amendment and brought the cases here.
R. Co. v. Central Stock Yards Co., 212 U. S. 132, 212 U. S. 144, was cited for the proposition. But the case gives no sanction to it. The point there was that a defect in a law could not be cured by precautions in a judgment -- not that what seemed a defect could not be cured by the construction given to the words by the court having final authority to declare their intent. We follow the Kentucky Court of Appeals in taking what they derive from the legislation of the state as if it were embodied in a single act.
"from time to time, as necessity may require, to enact such laws as may be necessary to prevent all trusts . . . from combining to depreciate below its real value any article, or to enhance the cost of any article above its real value."
March 13, 1908, not only was the legality of these last-mentioned combinations reaffirmed, but they were protected by injunction, and the sale by or purchase from the owner contrary to his agreement was punished by a fine.
When the Court of Appeals came to deal with the Act of 1890, the Constitution of 1891, and the Act of 1906, it reached the conclusion, which now may be regarded as the established construction of the three, taken together, that, by interaction and to avoid questions of constitutionality, they were to be taken to make any combination for the purpose of controlling prices lawful unless for the purpose or with the effect of fixing a price that was greater or less than the real value of the article. Owen County Burley Tobacco Society v. Brumback, 128 Ky. 137, 151; Commonwealth v. International Harvester Co., 131 Ky. 551, 568, 571-573; International Harvester Co. v. Commonwealth, 137 Ky. 668. The result seems to be that combinations of tobacco growers are held to do no more than restore an equilibrium that has been disturbed by a combination of buyers (Owne County Burley Tobacco Society v. Brumback, 128 Ky. 137, 152; Collins v. Commonwealth, 141 Ky. 564), whereas, if prices rise after a combination of manufacturers, it very nearly is presumed that the advance is above the real value, and that there is a crime. International Harvester Co. v. Commonwealth, 144 Ky. 403, 410-411.
Ky. 668, 677-678. We have to consider whether, in application, this is more than an illusory form of words, when, nine years after it was incorporated, a combination invited by the law is required to guess at its peril what its product would have sold for if the combination had not existed and nothing else violently affecting values had occurred. It seems that, since 1902, the price of the machinery sold by the plaintiff in error has risen from 10 to 15 percent. The testimony on its behalf showed that, meantime, the cost of materials used had increased from 20 to 25 percent and labor 27 1/2 percent. Whatever doubt there may be about the exact figures, we hardly suppose the fact of a rise to be denied. But, in order to reach what is called the real value -- a price from which all effects of the combination are to be eliminated -- the plaintiff in error is told that it cannot avail itself of the rise in materials, because it was able to get them cheaper through one of the subsidiary companies of the combination, and that the saving through the combination more than offset all the rise in cost.
efficiency in the machines, but with inclusion of the effect of the combination so far as it was economically beneficial to itself and the community, is a problem that no human ingenuity could solve. The reason is not the general uncertainties of a jury trial, but that the elements necessary to determine the imaginary ideal are uncertain both in nature and degree of effect to the acutest commercial mind. The very community, the intensity of whose wish relatively to its other competing desires determines the price that it would give, has to be supposed differently organized and subject to other influences than those under which its acts. It is easy to put simple cases, but the one before us is at least as complex as we have supposed, and the law must be judged by it. In our opinion, it cannot stand.
facts would be upon the imaginations and desires of purchasers, is to exact gifts that mankind does not possess.

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