Source: http://www.chanrobles.com/usa/us_supremecourt/370/405/case.php
Timestamp: 2019-09-21 23:22:23
Document Index: 184880652

Matched Legal Cases: ['§ 8', '§ 7', '§ 14', '§ 14', '§ 14', '§ 1', '§ 14', '§ 1', '§ 8', '§ 113', '§ 892']

Although the Sherman Act has been in existence for over 70 years, and although corporate officers have been indicted under that Act for almost as long, see, e.g., United States v. Greenhut, 50 F.4d 9 (D.C.D. Mass.1892); United States v. Patterson, 55 F.6d 5 (D.C.D. chanroblesvirtualawlibrary
Page 370 U. S. 407
Mass.1893), [Footnote 1] this question is one of first impression for this Court. The impetus for raising this issue at such a late date comes from the fact that, in 1955, the Congress raised the penalty provision in the Sherman Act from $5,000 to $50,000 without making a corresponding increase in the $5,000 penalty found in the Clayton Act.
No substantial support for such an artificial interpretation of a seemingly clear statute is provided by the legislative history. The most that can be said for the appellee's position is that the Reagan Bill, an unsuccessful competitor of the Sherman Bill, specifically included corporate chanroblesvirtualawlibrary
Page 370 U. S. 408
officers in its penal section while the Sherman Bill had no penal section at one time. The penal provision of the Reagan Bill was offered as an amendment to the Sherman Bill, and the Senate Committee on the Judiciary then redrafted and resubmitted a bill in the form which became the Sherman Act. 21 Cong.Rec. 2731, 3152. That Act outlawed certain acts by "persons," and there is nothing to indicate that the Congress intended to restrict the meaning as applied to corporate officers. See Trailmobile Co. v. Whirls, 331 U. S. 40.
The appellee points to § 8 of the Sherman Act, 15 U.S.C. § 7, which defines "person" "to include corporations and associations." He argues that, since corporations are included within the term, individual corporate officers are thereby excluded. This is a non sequitur. The mere fact that the term is given a broad construction does not alter its basic meaning, and no such inference can be drawn from the express inclusion of corporations as "persons." The reason for this inclusion is readily understandable. The doctrine of corporate criminal responsibility for the acts of the officers was not well established in 1890. See New York Central & H. R.R. Co. v. United States, 212 U. S. 481. When a criminal statute proscribed conduct by "persons," corporate defendants contended that only natural persons were included. 24 U. S. 718-719, and Canada Southern R. Co. v. Gebhard, 109 U. S. 527, 109 U. S. 542 (dissenting opinion), which distinguished between persons chanroblesvirtualawlibrary
Page 370 U. S. 409
and corporations when considering the application of the Fourteenth Amendment's protection to "persons." See Philadelphia Fire Assn. v. New York,@ 119 U. S. 110, 119 U. S. 120 (dissenting opinion). Therefore, we attribute no significance to the specific inclusion of corporations in the definition of "persons" in determining whether a corporate officer is within the term.
This construction is supported by the decisions of the lower federal courts which considered the problem of whether corporate officers were "persons" within the Sherman Act in the interim before the passage of the Clayton Act. The most significant case is United States v. MacAndrews & Forbes Co., 149 F.8d 3 (C.C.S.D.N.Y 1906), chanroblesvirtualawlibrary
Page 370 U. S. 410
in which the Court, considered the joint indictment of a corporation and some of its officers for violations of the Sherman Act. The defendants demurred to the joinder, the corporation pleading that only the human agents could be held responsible for the misdemeanor, while the officers pleaded that only the corporation was responsible. The Court refused to hold as a matter of law that either proposition was correct, because responsibility was, in each case, a matter of fact. The Court noted that the officers may or may not be convicted, depending upon whether they were personally responsible for the crime. [Footnote 3]
In United States v. Winslow, 195 F.5d 8 (D.C.D.Mass.1912), the same contention by corporate officers was given short disposition:
195 F. at 581. chanroblesvirtualawlibrary
Page 370 U. S. 411
In 1914, the Congress passed "An Act To supplement existing laws against unlawful restraints and monopolies, chanroblesvirtualawlibrary
Page 370 U. S. 412
We do not agree. The reasons for § 14 are sufficiently revealed by the legislative history. The provision originated chanroblesvirtualawlibrary
Page 370 U. S. 413
in the House, and, after conferences with the Senate, survived substantially intact. The reports provide no assistance, but the debates do. Whether any supplementary legislation was necessary was the essence of the debates. As Senate Shields, an opponent, said,
51 Cong.Rec. 9609. See 51 Cong.Rec. 9074, 9185, 9676, 9677, 9678, 9679, 16317. chanroblesvirtualawlibrary
Page 370 U. S. 414
Third, the proponents were fearful that the Sherman Act might not cover the activities of an officer which made a single "link" in the "chain" of events constituting the antitrust violation. Hence, the provision fixing responsibility for an act constituting "in whole or in part" the violations. 51 Cong.Rec. 9679, 16275, 16317.
We examine this legislative history in order to ascertain the intent of Congress as to the ultimate purpose of § 14 of the Clayton Act. United States v. E. I. du Pont de Nemours & Co., 353 U. S. 586, 353 U. S. 591-592; Schwegmann Bros. v. Calvert Distillers Corp., 341 U. S. 384, 341 U. S. 390-395; Federal Trade Comm'n v. Morton Salt Co., 334 U. S. 37, 334 U. S. 43-46, 334 U. S. 49; Corn Products Refining Co. v. Federal Trade Comm'n, 324 U. S. 726, 324 U. S. 734-737. How members of the 1914 Congress may have interpreted the 1890 Act is not of weight for the purpose of construing the Sherman Act. Federal Housing Administration v. Darlington, Inc., 358 U. S. 84; Rainwater v. United States, 356 U. S. 590; Koshkonong v. Burton, 104 U. S. 668; 6 U. S. 277. See United States v. Stafoff, 260 U. S. 477; Penn Mutual Life Ins. Co. v. Lederer, 252 U. S. 523; Levindale Lead & Zinc Mining Co. v. Coleman, 241 U. S. 432; 5 U. S. 331 (separate opinion); United States v. Freeman, 3 How. 556. Cf. United States v. E. I. du Pont de Nemours & Co., 353 U. S. 586.
Section 14 was intended to be a reaffirmation of the Sherman Act's basic penal provisions and a mandate to prosecutors to bring all responsible persons to justice. In the light of the congressional purpose revealed on the face of the statute and by the legislative history, this Court cannot construe § 14 as a restriction of § 1 of the Sherman Act. Thus, insofar as § 14 relates to the corporate officer who participants in the Sherman Act violation, whether or not in a representative capacity, no change was either intended or effected. chanroblesvirtualawlibrary
Page 370 U. S. 415
We also agree that there is nothing in the 1955 amendment to the Sherman Act nor in its legislative history to indicate that the Congress intended to restrict the applicability of the increased fine to corporations. See 69 Stat. 282; S.Rep.No.618, 84th Cong., 1st Sess. chanroblesvirtualawlibrary
Page 370 U. S. 416
I join in the opinion of THE CHIEF JUSTICE with some additional observations, believed warranted by the circumstance that the holding below has since been followed by five District Courts, with only two others to the contrary. [Footnote 2/1] chanroblesvirtualawlibrary
Page 370 U. S. 417
The language of § 1 of the Sherman Act, providing a penalty for "every person" who engages in a conspiracy or makes a contract in restraint of trade, of course, presents a serious obstacle to appellee's contention that he cannot be prosecuted thereunder. I agree with the Court that § 8, defining "person" to include corporations and associations, does not imply the exclusion of natural persons. Moreover, the fiction of corporate entity, operative to protect officers from contract liability, had never been applied as a shield against criminal prosecutions when the Sherman Act was passed. In fact, I think there can have been no serious doubt, even as early as 1890, that officers could be punished for crimes committed for their corporations. Until well into the nineteenth century, the corporation itself could not be convicted; the individuals who acted in its name of course could be. See the anonymous note of Holt, C.J.,12 Mod. 559, Case 935, 88 Eng.Rep. 1518 (K.B. 1701); Rex v. Medley, 6 Car. & P. 292, 297, 299, 172 Eng.Rep. 1246, 1249-1250 (K.B. 1834); State v. Great Works Milling & Mfg. Co., 20 Me. 41, 44 (1841); Ballantine, Corporations (rev. ed. 1946), § 113. However, it was recognized that corporate officers could be convicted for "representative" crimes even after the corporation's immunity was worn away, Regina v. Great North of England R. Co., [1846] 9 Q.B. 315, 325-327, 115 Eng.Rep. 1294, 1298; State v. Morris & E. R. Co., 23 N.J.L. 360, 369 (1852); State v. Patton, 26 N.C. 16 (1843), in line with the rule stated in 1 Bishop, Criminal Law (7th ed. 1882), § 892, that an agent might be punished for crimes committed for his principal. @Cf. 32 U. S. 142. A substantial volume of convictions of individuals for corporate crimes had accumulated by 1890. [Footnote 2/2] Congress legislated against this background; it used words sufficiently broad that representative crimes fell within their ordinary meaning; and the normal inference would be that Congress intended to punish those responsible for acts which it declared unlawful.
"Whether this law should extend to mere clerks, as was proposed in the third section [as reported by the Committee], is a matter of grave doubt. . . . To restrain and prevent the illegal tendency of a corporation is the proper duty of a court of equity. To punish the criminal intention of an officer is a much
Page 370 U. S. 419
more difficult process, and might be well left to the future. . . . These corporations do not care about your criminal statutes aimed at their servants. . . ."
I am not persuaded, as argued by the appellee, that the greater margin of support for the final bill than for the Reagan bill indicates that the criminal liability of corporate officers was narrowed. Opposition to the Reagan bill was based in part on its specification of unlawful purposes that would render a combination a trust, id. at 2469 (Senator Reagan), 2561 (Senator Teller), which was omitted by the Committee, and in part on the inclusion of any criminal penalties at all, a feature common to the Reagan and the final bills which was accepted at the end in a spirit of compromise, as it was by Senator Sherman himself, id. at 2604, 2655. No Senator ever suggested, so far as can be found, that criminal penalties should be provided for corporations and for self-employed or "ultra chanroblesvirtualawlibrary
Page 370 U. S. 420
vires" individuals alone. Thirty-four Senators -- a majority of the whole body -- voted to include, via the Reagan bill, sanctions against officers acting for the corporation. The Committee's reduction of the explicit but cumbersome language of the Reagan bill to the simple and on its face equally all-encompassing "every person" appears to have been simply a part of the general streamlining of the bill that took place in the Committee, with no intention of changing substance.
I find little support, however, for our conclusion in United States v. MacAndrews & Forbes Co., 149 F.8d 3 (C.C.S.D.N.Y.1906), or United States v. Winslow, 195 F.5d 8 (D.Mass.1912), despite some of the language in those opinions. Neither case squarely upholds criminal responsibility in a "representative" capacity. Among other things, the court in MacAndrews & Forbes declared it possible to infer from the indictment that the corporations were