Court Opinion

ID: 9812764
Source: CourtListenerOpinion
Date Created: 2023-08-31 22:47:37.166473+00
Date Added: 2024-06-11T15:26:28.428513
License: Public Domain

OlaeKSON, J.
Oil this record we are considering a demurrer. It is well settled that the complaint must be wholly insufficient before it can be overthrown by a demurrer. Council v. Bank, ante, 262 (265). In the present case we cannot so hold. Whether on the trial plaintiffs can sustain their allegations with competent proof is another matter.
The question involved: Was the court below correct in overruling defendants’ general .demurrer to the complaint, which alleged defendants, rail carriers, had unlawfully conspired to injure plaintiffs in violation of monopolies and trust statute, by (1) reducing rates for transporting gasoline and kerosene, intending later to restore them (C. S., 2563, par. 3), and (2) by charging lower rates to certain points in the State where there was competition, than to other points, without sufficient reason, with intent to injure plaintiffs (C. S., 2563, par. 5) ? We think so.
N. 0. Code, sec. 2559, is as follows: “Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce in the State of North Carolina is hereby declared to be illegal. Every person or corporation who shall make any such contract expressly or shall knowingly be a party thereto by implication, or who shall engage in any such combination or conspiracy, shall be guilty of a misdemeanor, and upon conviction thereof such person shall be fined or imprisoned, or both, in the discretion of the court, whether such person entered into such contract individually or as an agent representing a corporation, and such corporation shall be fined in the discretion of the court not less than one thousand dollars.” This section defines the offence and provides that indictment is one of the remedies.
The statute applicable in the present action is C. S., see. 2563: “In addition to the matters and things hereinbefore declared to be illegal (sec. 2559), the following acts are declared to be unlawful, that is, for any person, firm, corporation, or association directly or indirectly to do or to have any contract, express or knowingly implied, to do any of the acts or things specified in any of the subsections of this section: . . . (3) To willfully destroy or injure, or undertake to destroy or injure, the business of any opponent or business rival in the State of North Carolina with the purpose or intention of attempting to fix the price of any*481thing of value when the competition is removed. . . . (5) Who deals in any thing of value within the State of North Carolina, to give away or sell, at a place where there is competition, such thing of value at a price lower than is charged by such person, firm, corporation, or association for the same thing at another place, where there is not good and sufficient reason, on account of transportation or the expense of doing business, for charging less at the one place than at the other, with the view of injuring the business of another.”
In State v. Coal Co., 210 N. C., 742, the criminal attitude of the above section (2563 [3]) has been fully considered, and a jury verdict and judgment thereon sustained.
1. It is contended by the demurrer of defendants that the amendment and complaint as amended do not contain facts sufficient to constitute a cause of action (C. S., section 511 [6]), in that any alleged monopolist acts on the part of the defendants, alleged in the complaint, of which the defendants may be guilty, are criminal offenses and can only be inquired into in a proper action instituted under Chap. 53 of the Code, entitled “Monopolies and Trusts,” by the Attorney-General of the State of North Carolina.
2. That the court is without jurisdiction to hear and determine the cause of action, if any, set out in the complaint, for that: (1) An action under the provisions of Chapter 53 of the North Carolina Code, entitled “Monopolies and Trusts,” with respect to the facts alleged in the complaint, can only be brought and maintained by the Attorney-General of the State of North Carolina. (2) Upon the facts alleged in the complaint, the court has no jurisdiction to determine the right of the plaintiffs to complain of the alleged acts of the defendants.
The statute is contrary to defendants’ contentions. Section 2574 is as follows: “If the business of any person, firm, or corporation shall be broken up, destroyed, or injured by reason of any act or thing done by any other person, firm, or corporation in violation of the provisions of this chapter, such person, firm, or corporation so injured shall have a right of action on account of such injury done, and if damages are assessed by a jury in such case judgment shall be rendered in favor of plaintiff and against the defendant for treble the amount fixed by the verdict.”
A casual relation between violation and injury must be shown. Lewis v. Archbell, 199 N. C., 205. See Lewis v. Frye, 207 N. C., 852; Brown v. R. R., 208 N. C., 423; Rice v. Ice Co., 204 N. C., 768.
Defendants contend (2) “The plaintiffs cannot recover damages based upon a violation of chapter 53 of the Code, sections 2559 to 2574, in elusive, entitled ‘Monopolies and Trusts,’ and upon an unlawful combination and conspiracy in violation of said chapter, where the act alleged *482to have been committed in furtherance of the conspiracy is a lawful act, the damage in such case, if any, being damnum absque injuria. The act alleged in the complaint as having been committed in furtherance of the alleged conspiracy is a lawful act and has been declared by the Supreme Court of North Carolina in the case of Carolina Motor Service, Inc., et al., v. Atlantic Coast Line Railroad Company, et al., 210 N. C., 36, to be a lawful act.”
We think the present cast distinguishable from the Carolina Motor Service, Inc., v. A. C. L. Ry. Co., supra. That was an action (bill in equity) against certain railroads and the Utilities Commissioner of North Carolina, alleging (1) discrimination under the Public Utilities Act, and (2) incidentally a conspiracy to monopolize the transportation of gasoline, and the only relief prayed for was an injunction against the railroads and the Utilities Commissioner. The court held (1) that plaintiff failed to show any interest to be protected under the Public Utilities Act, and (2) that the alleged monopolistic acts of the defendants are criminal, and that equity will not enjoin the commission of a crime. The present ease is not based on the Public Utilities Act to any extent whatever. It is an action at law for damages under the above statute, C. S., 2574. It is true the complaint also asks for a restraining order, but the record does not show that this phase of the case has been pressed. At the present time plaintiffs are relying on the damages phase of the case only. The first part of the opinion relates to the Public Utilities Act only and has no application to the present case. The remainder of the opinion relates to plaintiffs’ prayer for an injunction, and the holding is that since the threatened wrong is a criminal act, equity does not restrain criminal acts, but leaves them to the criminal courts. The opinion, to some extent, supports the plaintiffs’ contention that the alleged acts of the defendant carriers are unlawful and in violation of sec. 2563, quoting from the opinion: “While C. S., 2563, declares that all of the above-mentioned acts are unlawful, the following section, C. S., 2564,” provides they are criminal. The same acts which sec. 2564 and the above opinion of the court declare criminal are by the express terms of sec. 2574 made the basis of a cause of action for treble damages by any person injured thereby, the defendants’ demurrer admits that plaintiffs have been so damaged.
The provisions of the monopoly statutes apply to railroads just as they do to individuals and other corporations. Both at common law and under our monopoly statutes a conspiracy to reduce rates with intent to injure a competitor and thereafter to restore prices is actionable. Likewise a conspiracy to charge lower rates where there is competition, while maintaining higher rates to other points in the State for the same thing of value without sufficient reason, with intent to injure a competitor, is actionable. State v. Atlantic Ice & Coal Co., 210 N. C., 742.
*483The rates fixed by defendants as the result of the alleged conspiracy are not legal rates, that is, they do not have the sanction of any administrative or judicial tribunal, either of the Utilities Commissioner or the courts, because the proviso to C. S., section 1112 (o), deprives the Utilities Commissioner of jurisdiction over reductions in rates. the proviso reads as follows: “Provided, however, that nothing herein shall be construed to prevent any public-service corporation from reducing its rates either directly or by change in classification.” This means that any railroad acting lawfully, that is, individually and with proper intent, may reduce its own rates free of the control of the Utilities Commissioner, but it does not mean that it can, acting unlawfully or as a result of a conspiracy with other railroads, use this uncontrolled power to injure a competitor. It is conceded in defendants’ brief that “Under the law of this State railroads may reduce their rates at will.”
Further, Public Laws of 1933, N. C. Code, 1935 (Michie), sec. 1112(1) to (36) are not germane. The plaintiffs’ complaint is bottomed on the provisions set forth in the Monopolies and Trusts Statutes, supra. The ending clause of the 1933 act, supra, sec. 27, is as follows: “No present provision of law shall be deemed to be repealed by this article except such as are directly in conflict therewith.” In fact, sec. 1112(2) reads: “Every rate made, demanded, or received by any public utility or by any two or more public utilities jointly, shall be just and reasonable.”
The plaintiffs’ action for damages is under Chapter 53 — Monopolies and Trusts. The rights of plaintiffs and the wrongs set forth in plaintiffs’ complaint are founded on the statutory provisions therein set forth and are not in conflict with Chapter 307, Public Laws of 1933, supra. We think there is no conflict in the acts. Horton v. Tel. Co., 202 N. C., 610.
This is a civil action alleging damage under the Monopolies and Trusts Statutes, supra. In tbe case of State v. Atlantic Ice & Coal Co., supra (748), which was a criminal action, speaking to the subject, this Court said: “In Fletcher’s Cyc. Corporations (Permanent Ed.) Vol. 10, ch. 56, part of sec. 5016, p. 850, it is said: 'Ruinous competition by lowering prices has been recognized as an illegal medium of eliminating weaker competitors,’ citing many authorities. Porto Rican Amer. Tobacco Co. v. Amer. Tobacco Co., 30 Fed. Reporter, 234 (236) ; Standard Oil Co. v. U. S., 221 U. S., 1; U. S. v. Amer. Tobacco Co., 211 U. S., 106. Wharton’s Criminal Law, Vol. 3, 12th Ed. (1932), sec. 2330, is as follows: In tbe closing years of tbe 19th Century and early part of tbe 20th, statutes were enacted in nearly all states and by Congress with a design to restrain tbe evils of complete monopoly. This class of laws has been sustained in principle as to both civil and criminal features. They *484were leveled at contracts, combinations, and conspiracies in restraint of trade that bad been declared to be against public policy and void under tbe common law before tbe passage of sucb new statutes. Tbe language of tbe statutes need be supplemented by allegations as to tlie facts. Conspiracy to combine as well as tbe actual cooperation to monopolize is forbidden. Tbe exaction of excessive prices upon tbe sale of necessaries was forbidden in tbe United States as in various countries during tbe World War. The criminal part of the act failed for indefiniteness.’ ” Constitution of N. C., Art. I, secs. 7 and 31; S. v. Craft, 168 N. C., 208; Mar-Hof Co. v. Rosenbacker, 176 N. C., 330; Addyston Pipe and Steel Co. v. United States, 175 U. S., 211, 85 Fed., 271, 44 L. Ed., 136, affirming tbe lower court. In the Addyston case, supra, Judge Taft said: “Upon tbis review of tbe law and tbe authorities, we can have no doubt that the association of the defendants, however reasonable the prices they fixed, however great tbe necessity for curbing themselves by joint agreement from committing financial suicide by ill-advised competition, was void at common law, because in restraint of trade, and tending to a monopoly. But tbe facts of tbe case do not require us to go so far as tbis, for they show that tbe attempted justification of tbis association on tbe grounds stated is without foundation.” U. S. v. Trans-Missouri Freight Association, 166 U. S., 290, 41 L. Ed., 1007; U. S. v. Joint Traffic Association, 171 U. S., 505; Northern Securities Co. v. U. S., 193 U. S., 197, 48 L. Ed., 679; Tift v. Southern Railroad Co., 123 Fed., 789; Keogh v. Chicago Northwestern Railroad Company, 260 U. S., 156, 67 L. Ed., 183.
The defendants contend: (3) “Plaintiffs allege that it is the purpose of defendants to increase the rates after the accomplishment of the purpose alleged in the complaint, and that the defendants can and will increase such rates, when as a matter of law, under‘the statutes of North Carolina, defendants cannot increase such rates or any freight rate without the approval of the Utilities Commissioner. That the rates of which plaintiffs complain have been approved by the Utilities Commissioner as proper rates by formal order entered in the matter of Application of Southern Freight Association, Atlanta, Georgia, through Chairman J. E. Tilford, for Authority to Establish Truck Competitive Rates on Gasoline, including Blended Gasoline and Kerosene, from Wilmington, N. C., to North Carolina Points, Docket No. 446, which order is now in effect, and plaintiffs cannot complain of any damage resulting from the transportation of property at a proper rate by the defendants or any of them.”
Section 1112 (o), is as follows: “Tbe said Utilities Commissioner shall at all times be required to keep himself informed as to tbe public-service corporations hereinbefore specified and enumerated, their rates and *485charges for service, and tbe service supplied to the citizens of the State and purposes therefor; and he shall at all times be empowered and required to inquire into such service and rates charged therefor, and to fix and determine as herein provided the reasonableness thereof, and upon petition or otherwise to make full inquiry into such rates and charges in behalf of the citizens of the State, and compel and require compliance with the regulations and charges, and final determination fixed therefor under the provisions of this article, and no corporation, association, partnership, or individual doing business in the State of North Carolina as a public-service corporation, or any corporation herein designated, shall be allowed to increase its rate and charge for service or change its classification in any manner whatsoever except upon petition duly filed with the Utilities Commission and inquiry held thereon and final determination of the reasonableness and necessity of any such increase change in classification or service: Provided, however, that nothing herein shall be construed to prevent any public-service corporation from reducing its rate either directly or by change in classification.”
The complaint has an exhibit, in part, as follows: “Southern Freight Association, Atlanta, Georgia. 19 June, 1935. To the Utilities Commission of the State of North Carolina, Raleigh, N. C. J. E. Tilford, for and on behalf of all rail carriers operating in the State of North Carolina, hereby respectfully request authority to establish truck competitive rates on: ‘Gasoline, including blended gasoline and kerosene, in tank ears, carloads, estimated weight 6.6 pounds per gallon, subject to Rule 35 of Southern Classification/ and routing shown in connection therewith, from Wilmington, N. C., to destinations in North Carolina, applicable on North Carolina intrastate traffic, and, for cause, states: During the past several months the rail carriers have lost a very substantial proportion of this traffic to tank trucks. After a series of conferences with the oil interests, these carriers have determined to establish reduced rates on both interstate and intrastate traffic in an effort to regain for future handling a part of the lost traffic and to prevent additional losses. Since the proposed rates are made to meet tank truck competition, they are not based strictly upon any mileage scale or any percentage relationship to first-class rates. The new rates, of course, are lower in every case than the present ratesj generally, they represent very substantial reductions¡’ etc. (Italics ours.)
Under the proviso above set forth, this was unnecessary to be done, as the railroad carriers could reduce their rates at will. They have voluntarily put their heads into the “lion's jaw,” it is no fault of plaintiffs. “These carriers have determined to establish reduced rates.” No doubt by this unnecessary method, they thought that they could take advantage *486of truck-carrier competitors. Tbe Utilities Commissioners do not have the power to prevent any reduction proposed by the railways. The rates proposed by the railways go into effect whether the Utilities Commissioner approves them or not. Therefore, it cannot be said that the Commissioner has any jurisdiction whatever over reductions proposed by the railways, either to approve or disapprove. The defendant railways take the position in their brief that the Utilities Commissioner has no power to prevent them reducing rates as they please, and neither have the courts — that where rate reductions are concerned, they are answerable to no one, and that they can do whatever they please to destroy motor truck competition, conspire to reduce rates temporarily, conspire to charge unreasonably low rates where there is competition, then after they have injured or destroyed the business of plaintiffs and others, now contend that this is a lawful act, and to plaintiffs this is damnum absque injuria. We cannot so hold.
Under the proviso to sec. 1112 (o), the defendants can reduce their rates, but it does not follow that conspiracies in violation of the Monopolies and Trusts Statute are made legal by this proviso. The defendants say that a situation has been reached that they cannot raise their rates without the approval of the Commissioner, but whatever the situation in which the defendants find themselves, they created it, and created it by wrongfully taking advantage of the proviso to see. 1112 (o) and conspiring to reduce rates to the injury of plaintiffs. The demurrer admits this. They admit that on their own responsibility they conspired to reduce the rates with the intent to injure plaintiffs, but they now say they are not responsible for having done so. The vice is the method— conspiracy — and the intent — ■injury of competitors. As was well said by Judge PecJcham in the Trans-Missouri Assn, case, supra, what one company may do by way of charging reasonable rates is radically different from entering into a conspiracy with others to fix rates.
Eor the reasons given, the judgment of the court below is
Affirmed.