Court Opinion

ID: 8822187
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:36:20.685708+00
Date Added: 2024-06-11T17:04:40.185122
License: Public Domain

ROSS, Circuit Judge
(dissenting in part). I dissent from that portion of the order of this court affirming that of the Federal Trade Commission in any respect, for the reason that, in my opinion, the record shows that the true status of the Los Angeles Grocery Company was that of a buying exchange, and cannot be properly regarded as a wholesale dealer, and, that being so, that the petitioning wholesale dealers, whose legitimate business mainly, if not entirely, depends upon the custom of retailers, were justified in combining to protect such legitimate business. The witness Shurtleff, who had charge of the business of the Los Angeles Grocery Company, having admitted in his testimony that it was that of a buying exchange until January 1, 1918, said:
“We bought the goods at a given price, turned around, and sold those goods to our stockholders at approximately the same price that we bought them at, and at the end of the month the expense of doing business was divided equally among those having purchased. That was continued until January 1, 10ÍS. Just prior to January 1, 1918, action was taken by the directors and confirmed by the stockholders that on and after that date we would discontinue buying goods and selling them without a profit, and assessing the expense of doing business at the end of the month, but that the business would be conducted for profit. We would buy those goods in the regular jobbing way, as many of them as we could, direct, and what we could not buy direct, wherever we could get the best price, and in turn would sell these goods for profit, as any wholesale grocer would, taking into consideration the expense of doing business, and an the time figuring on having a 1 per cent, net above the cost of doing business, in which to justify the investment of our stockholders.”
*743This testimony itself shows, it seems to me, that the change so made, arranging for a nominal 1 per cent, net above the cost of doing business, was a mere incident in the main business for which the corporation was organized and carried on, namely, the buying for its large number of retail stockholders, and was so arranged in the endeavor to make it appear that the company was a wholesale dealer. Moreover, in the cross-examination of the witness Morgan, that witness, in answer to a question by counsel for the Trade Commission as to what he meant by “members” of the Grocery Company, having answered:
‘T mean that the members of the Los Angeles Grocery Company and the stockholders are nothing else but retailers”
■—the counsel for the commission said:
“That is quite true. We admit- that (italics mine). *The stockholders are for the most part retail grocers. Have you any information by which you can say now that the Los Angeles Grocery Company refuses to sell to others than their stockholders?”
The qualification thus added to the admission by the counsel for the commission should, in my opinion, be read in connection with the endeavor shown by the above-quoted testimony of the man at the head of the Grocery Company in question to make it appear that it was a wholesale dealer, by arranging for a nominal 1 per cent, net above the cost of doing business.