Court Opinion

ID: 8851964
Source: CourtListenerOpinion
Date Created: 2022-11-26 17:16:53.009862+00
Date Added: 2024-06-11T17:05:31.761465
License: Public Domain

SHIPMAN, Circuit Judge
(concurring). I concur with Judge LACOMBE in tbe conclusion that the circuit court properly sustained tbe demurrer of the E. Howard Watch & Clock Company in tbe above-entitled cause. I am not now prepared to adopt, as a reason for that conclusion, what I understand to be Judge LACOMBE’S opinion, that tbe agreement and conduct of tbe combined defendants, which are set forth in tbe complaint, do not constitute a violation of the first or second sections of tbe act of July 2, 1890. My reason for regarding tbe complaint as demurra-ble is tbe more technical one that tbe allegations in regard to tbe acts which tbe defendants committed, or in regard to tbe facts which are charged to have existed, do not show that the defendants ‘restrained any interstate commerce, or monopolized any part of sucb trade or commerce. What tbe statute struck at was “combinations, contracts, and conspiracies to monopolize trade and commerce among the several states or with foreign nations” (U. S. v. E. C. Knight Co. [Jan. 21, 1895] 15 Sup. Ct. 249), but it will not be contended that section 7 of tbe statute gives a cause of action .to any person against another person who had merely planned to commit or unsuccessfully attempted to commit the prohibited acts. The illegal contract or attempted monopoly must have resulted in an injury of some sort to the plaintiff’s interstate business. It should therefore appear directly, and not by way of inference, that the acts of the defendants, or their attempts to monopolize interstate commerce, resulted in its restraint or monopoly, to the plaintiff’s injury. Hutchins v. Hutchins, 7 Hill, 104. “An action will not lie for the greatest conspiracy imaginable if nothing be put in execution, but, if the party be damaged, the action will lie. From whence it follows that the damage is the ground of the action.” Savile v. Roberts, 1 Ld. Raym. 378. The important allegations in regard to the conduct of the combined defendants and the results of the acts are that the complainant owned an extensive watch-case manufactory in Kentucky, and subsequently in Ohio, and had the capacity to manufacture and offer for sale 25,000 watch cases per month, and that before November 16, 1887, it sold all of said *647goods to a great number of dealers tlirougiiout the United States and Canada. It may be admitted that this substantially alleges that (lie complainant engaged in interstate commerce. It is also alleged that the defendants agreed, on or about said day, that they- would not thereafter sell any goods manufactured by them to any person who should buy or sell any goods manufactured by the complainant, and that the manydealers in watch cases throughout the United States and Canada, and that many of the complainant’s existing and previous customers, were notified of this agreement; that upon receipt of sucli notice a large number of the then and 1 heretofore purchasers of the,, plaintiff’s watch cases withdrew Their patronage, and ceased thereupon entirely to purchase or deal in any wise in plaintiff's goods; that all the acts of the defendants were done and performed for the purpose of establishing a monopoly in the supply of watches to the public, contrary to the policy of the law, and in violation of the statutes of the state oí New York and of the United States. But the'residence of no withdrawing customer is alleged. No interference with interstate commerce is shown, except by inferring that some of the withdrawing customers lived in another state than Ohio; and, if they had bought the, complainant's goods, interstate transportation would have taken place. The general allegation that the acts done in pursuance of the compact of November 16, 1887, and before the passage of the act of 1890, were dyne for the purpose of establishing a monopoly in the supply of watches, in violation of the statutes of New York and of the United States, is not an allegation that the acts restrained, or that the attempt actually monopolized, interstate trade or commerce.
It is next alleged that after the passage of the act of July 2, 1890, “all the former purchasers and dealers in said plaintiff’s watch cases and other dealers in watch cases were, as plaintiff is informed and verily believes, ready and willing to buy large quantities of said plaintiff’s goods, and this plaintiff would have at once regained all the business and the profits whereof it had been deprived by the acts aforesaid of the defendants, but that said defendants, after the pasage of the said act of congress, ratified, confirmed, renewed, and continued the contracts, agreements, and combinations hereinbefore alleged, and in like manner, and with the same intention as hereinbefore alleged, served notices of their said ratification, confirmation, renewal, and continuance of the said agreements and combinations upon all said dealers in plaintiff's watch cases, whereby said dealers have continued to this day. forced by said renewal threats of defendants, and compelled thereby, and not otherwise, to refuse to purchase plaintiff's watch cases, or to deal in any wise therein.” The allegation is that the former purchasers and dealers, who were intimidated by the previous notices, and who had stopped purchasing, continued, in consequence of the new notice, to be intimidated, and were forced by the renewed threats to refuse to purchase the plaintiff’s watch «•ases. The names of the states in which these intimidated pep-sons resided are not given. No new diversion of trade and no *648new interference with interstate commerce are alleged. Admitting that the complaint sufficiently avers renewed acts of the defendants, there is the same absence of allegation that any customer, old or new, outside of the state of Ohio, refused to purchase, or that interstate commerce was interfered with. The complaint was, of course, not based upon the theory in the pleader’s mind that the statute prohibited an attempted monopoly and a consequent injury, whether the trade or commerce monopolized was domestic or interstate, but he seems to have been cautious in regard to averring that the attempted monopoly had affected interstate commerce. Where av plaintiff declares upon a statute, especially upon one penal in its character, imposing, as this one does, three times all actual damages as a punishment for offenses against its provisions, his complaint should contain explicit aver-ments, which would, if not controverted, bring his cause of action within the provisions of the statute. The pleader in this case has failed to thus aver that trade between the states or with foreign countries has been restrained by action of the defendants, and the judgment of the circuit court sustaining the demurrer should, in my opinion, be affirmed.
WALLACE, Circuit Judge.
I agree with the majority of the court that this action must be deemed to be founded upon the act of congress of July 2, 189.0, and that the demurrer to the complaint was well taken unless the complaint sets forth a cause of action given by that statute. I dissent, however, from the conclusion that the complaint does not set forth such a cause of action. Briefly stated, the averments of the complaint are that prior to the time of the enactment of the statute the plaintiff was engaged in manufacturing and selling watches in the states of Ohio and Kentucky, having a market therefor throughout the United States, and selling its goods to a great number of dealers in other states; that the defendants, also manufacturers of watches, had agreed among themselves to maintain an arbitrary fixed price for all their goods; that thereafter, in order to compel plaintiff to join them in that compact, and prevent it from selling its goods unless it did so, the defendants combined in an agreement not to sell any watches made by any of them to any dealers who should thereafter buy of the plaintiff, and notified the dealers in watches throughout the United States of the agreement; that thereafter the defendants did refuse to sell such dealers as had bought of plaintiff, and thereby they prevented a great number of dealers from buying of plaintiff, and effected a .complete boycott of its trade; and that, after the statute was passed, the same combinations and acts were renewed and continued by the defendants, with the malicious purpose, and with the result, of suppressing plaintiff’s trade. The complaint does not explicitly allege that this combination was entered into or these acts were done by the defendants for the purpose of preventing the plaintiff from selling to customers in other states; but from the facts alleged the conclusion is irresistible that this purpose was comprehended in the *649conspiracy of tire defendants, and the law presumes that they contemplated the ordinary and natural consequences of their acts. The statute declares various acts affecting trade or commerce among- the several states or with foreign nations criminal, some of them being- acts which are not criminal at common law. It also gives a civil remedy, cognizable by the federal courts, to any person or corporation injured by reason of sucli acts. The statute can have no application to acts affecting purely infra-state trade, — • the commerce only between citizens of the same state, — not only because its language does not permit it, hut because the power of commercial regulation given to congress by the constitution is restricted to interstate commerce, foreign commerce, and commerce with the Indian tribes. By one section it declares it to he a misdemeanor to monopolize, or attempt to monopolize, or combine or conspire to monopolize, any part of the trade or commerce among- the several states or with foreign nations; by another it -declares illegal every contract, combination in the form of trust or otherwise, or conspiracy in restraint of such trade or commerce. The same punishment is affixed to each of the different offenses. The questions in the case are whether such a combination or conspiracy as is set forth in the complaint operates upon interstate trade or commerce, and whether it is in restraint of trade, within the meaning of that term as used by congress in the statute. I cannot doubt that a combination intended and adapted to strangle the trade between the dealer who sells his goods in one state and his customers in other states of the Union who buy them, — a trade which necessarily involves the transportation of the goods from one state to another, — is intended ami adapted to affect interstate commerce, and is, therefore, within the scope of the prohibition of the statute. The power of regulation is not confined to commerce which begins with the transit of goods, hut operates upon all commerce of which the transit is an ordinary incident. This is illustrated by the legislation of congress in regard to trade-marks. The original trade-mark statute was held to he void because it was intended to embrace trademarks used in infra-state commerce as well as in interstate commerce. Trade-Mark Cases, 100 U. S. 22. Thereupon congress passed another statute protecting- trade-marks used in commerce with foreign nations or with the Indian tribes. In conferring jurisdiction of suits to protect such trade-marks upon the federal courts congress declared that such courts should not take cognizance unless the trade-mark in controversy “is used on goods intended to be transported to a foreign country,” thus plainly indicating an intention to give a remedy although the trade-mark has not been used upon goods actually transported or in course of transportation. See Ryder v. Holt, 128 U. S. 525, 9 Sup. Ct. 145. It has been repeatedly said in the opinions of the supreme court that commerce among the states, as that term is used in the constitutional provision which vests in congress the power of regulation, includes the buying and selling of commodities, and the transportation incidental thereto. County of Mobile v. Kimball, 102 U. S. *650691-702; Gloucester Ferry Co. v. State of Pennsylvania, 114 U. S. 196-203, 5 Sup. Ct. 826; Kidd v. Pearson, 128 U. S. 1-20, 9 Sup. Ct. 6. The Knight Case does not disaffirm the proposition, but reiterates it. What the Knight. Case decides is that a combination to control the manufacture of a product 'within a single state is not in restraint of interstate commerce, notwithstanding the fact that such commerce may be indirectly affected by it. The court say that the fact that an. article is manufactured for export to another state does not of itself make it an article of interstate commerce, and the intent of the manufacturer does not determine the time when the article or product passes from the control of the state and belongs to commerce. But the court also used this language: “Contracts to bu3r, sell, or exchange goods to be transported among the several states, the transportation and instrumentalities, and articles bought, sold, or exchanged, for purposes of such transit among the states, or put in the way of transit, may be regulated; but this is because they form part of interstate trade *or commerce.” The acts charged against the defendants are intended and adapted to impinge upon the “contracts to buy, sell, or exchange goods to be transported among the several states,” made and to be negotiated by the complainant with its customers in other states ; and it cannot matter whether those contracts are negotiated in the state where the goods were produced or in the state where the customers of complainant reside.
Are the acts charged in restraint of trade ? The primary purpose of the conspiracy set forth was doubtless to compel the plaintiff to join in a compact with the other defendants to maintain an arbitrary price or scale of prices for their goods, or otherwise to drive the corporation out of business; but its legitimate and necessary result was to likewise deprive dealers in watches generally, carrying on their business in many states, of the untrammeled exercise of their right to buy from the plaintiff. The books are full of cases in which a covenant not to carry on a business or vocation has been depiared to be in restraint of trade, although the contract was only to restrict the covenantor. As is said in Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173: “The illegality of contracts affecting public trade appears in the books under many forms. The most frequent is that of contracts between individuals to restrain one of them from performing a business or employment.” So conspiracies aimed at the trade or occupation of a single person have not’ only been declared civilly actionable, but criminal, because affecting the public as well as the immediate individual. In the early case of Rex v. Eccles, 3 Doug. 337, the indictment alleged that the defendants had conspired to “deprive and hinder” one “from following ánd. exercising” his trade as a hatter; and Lord Ellenborough alluded to it as one for conspiracy “in restraint of trade, and so far a conspiracy to do an unlawful act affecting the public.” Rex v. Turner, 13 East, 228, 231. Doubtless, in prohibiting contracts or combinations in restraint of trade it was the intention of congress to prohibit only those which were previously recognized at common law as belonging to that category, and not to prohibit *651any which only effect a reasonable restraint. Such, contracts or combinations as operate only in partial restraint oí trade, are made for a just and honest purpose, and are lor the protection of the legitimate interests oí the parties, are consistent with the public convenience and the general welfare. And it is undoubtedly trae ihat the tendency of modern judicial opinion is to regard with more liberality than formerly prevailed all contracts or combinations which are designed to protect parties from unnecessarily injurious competition, even though their indirect results may be to subject the public to a monopoly. I do not think the combination set forth in the complaint can be approved upon any such considerations. No body of manufacturers is justified in combining to coerce a competing manufacturer to join them and sell his goods at a price to be fixed by (hem, and to destroy his business in the event of his refusal to do so; and it matters not that they propose to destroy his business by peaceful methods of influencing his customers not lo deal with him. “Men can often do by the combination of many what severally no one could accomplish, and even what, when done by one, would be innocent.''-' Morris Run Coal Co. v. Barclay Coal Co., supra. “Any one man, or any one of the several men, acting independently, is powerless; but when several combine and direct their united energies to the accomplishment of a bad purpose, the combination is formidable. Its power for evil increases as its numbers increase.” State v. Glidden, 55 Conn. 46, 8 Atl. 890. “Every man has the right to employ his talents, industry, and capital as he pleases, free from the dictation of others; and if two or more persons combine to coerce his choice in this behalf, it is a criminal conspiracy, whether the means employed are actual violence or a specie^ of intimidation that works upon the mind.” State v. Stewart. 59 Vt. 273, 9 Atl. 559. The weight of authority supports the proposition that a combination is not only actionable, but is a criminal conspiracy, whenever (he act to be done has the necessary tendency to prejudice the public, or to oppress individuals by unjustly subjecting them to the power of confederates, and giving effect to their purposes, whether of extortion or of mischief. The doctrine of some of the adjudications that a conspiracy is not criminal unless its object is to compass some criminal purpose, or some purpose not criminal by criminal means, is not the prevailing opinion. It suffices to quote the language of Chief Justice Shaw in Com. v. Hunt, 4 Metc. (Mass.) 111, 123, as follows:
“Without attempting to review and reconcile all the cases, we are of opinion that, as a general description, though perhaps not a precise and accurate definition. a conspiracy must he a combination of two or more persons by some concerted action to accomplish some criminal or unlawful purpose, or to accomplish some purpose not in itself criminal or unlawful by criminal or un-la wfnl means. We use the terms ‘criminal or unlawful’ because it is manifest that many acts are unlawful which are not punishable by Indictment or other public prosecution; and yet there is no doubt, we think, that a combination by numbers to do them would be an unlawful conspiracy and punishable by indictment.”
The statute upon which this action is founded discriminates between combination and conspiracy, and it not only makes both *652criminal, but it makes contracts in which there is no element of a conspiracy or combination also criminal if in restraint of trade. It is therefore quite immaterial whether the acts charged in the complaint are sufficient to constitute a criminal conspiracy at common law. It suffices if the combination set forth is oppressive in its nature, and mischievous in its effects. I do not question the right of the defendants to combine for their own protection against unfair competition, and in that behalf, their commodity not being one of prime necessity, to agree not to sell to those who do not buy exclusively of them, or who buy of the complainant or some other obnoxious competitor; but I repudiate the doctrine that they can combine to induce the customers of a rival manufacturer not to deal with him unless he will join their combination. Upon the aver-ments in this complaint, which are of course to be taken as true for the purposes of the demurrer, this case is one in which the defendants are acting not from motives of self-protection, but oppressively, and are actively concerting to destroy the business of a rival by inducing other dealers not to trade with him because he will not sell his goods at their prices. In People v. Fisher, 14 Wend. 1, the defendants were indicted under a statute making it criminal for two or more persons to conspire to commit any act “injurious to trade or commerce.” They were journeymen shoemakers, and had concerted together to fix the price of making coarse boots, agreeing that if a jorunevman shoemaker should make any such boots at a compensation below the rate established he should pay a penalty, and, if any master shoemaker should employ a journeyman who had violated their rules, that they would refuse to work for him, and would quit his employment. In sustaining the indictment, and declaring such acts criminal, the court used this language:
“Tile man. who owns an. article of trade or commerce is not obliged to sell it for any particular price, nor is the mechanic obliged by law to labor for any particular price. He may say that he will not make coarse boots for less than one dollar per pair, but he has no right to say that another mechanic shall not make them for less. The cloth merchant may say that he will not sell his goods for less than so much per yard, but has no right to say that another merchant shall not sell for a less price. If one individual does not possess such a right over the conduct of another, no number of individuals can possess such a right. All combinations, therefore, to effect such an object are injurious not only to the individual particularly oppressed, but to the public at large. * * * The interference of the defendants was unlawful. Its tendency is not only to individual oppression, but to public inconvenience and embarrassment.”
This language exactly fits the present case. For these reasons I think the complaint states a good cause of action, and the judgment sustaining the demurrer should be reversed.