Court Opinion

ID: 3588914
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:38:05.621659+00
Date Added: 2024-06-11T13:39:11.462370
License: Public Domain

It does not seem to me that this case comes within the principle of the Union Blue Stone Co. Case (164 N.Y. 401), theBerlin  Jones Envelope Case Co. (166 N.Y. 292) and kindred cases — and I am not without some acquaintance with those cases, inasmuch as the judgment affirmed in the first case was directed by me at Circuit, and the opinion in the last written by me. Nor is there any case in this court, so far as we have found, precisely analogous, but the principle underlying the decision inNational Protective Association v. Cumming (170 N.Y. 315) is applicable for reasons which I shall, as briefly as possible, suggest.
It will be observed that this is not a case where the manufacturers have combined for the purpose of raising prices to the consumer of the remedies they manufacture, nor does it appear that it is the object of the wholesale dealers, who form the aggressive part of this association, to increase the price to the consumer. If the object be to raise the price to *Page 15 
the consumer and thus increase the profits of the manufacturer and the agency by which he passes his goods on to his retail dealers, then it may well be that it is void because in restraint of trade within the principle of the Union Blue Stone Co. case and the Berlin and Jones Envelope Co. Case (supra), notwithstanding the impression that there may be in some judicial minds, and possibly in others, that proprietary remedies are not entitled to be classed among the necessaries of life. The phrase "necessaries of life," as used in connection with the subject of restraint of trade, must certainly be regarded as broad enough to include articles of which the public consume $60,000,000 worth in a year.
The object of this association, however, is not to fix prices at which the manufacturer's goods must be sold. It attempts no restraint whatever upon the manufacturer in making prices. He may lower or increase the price at his pleasure. In that respect he is precisely as free as he was before the association was formed and he became a member of it. He may name the price which the consumer shall pay for his article now as he could then, which means that he can both make the price and enforce it by contract. (Garst v. Harris, 177 Mass. 72; Fowle v. Park,131 U.S. 88; Walsh v. Dwight, 40 App. Div. 513.)
That being so, the query naturally is, What restraint does the association put upon the manufacturer and what can be the purpose of this association which does not seek an increased profit at the expense of the masses?
The answer, as I read the complaint, is that the distributing agencies — the wholesale dealers — by which the manufacturer's goods are passed on to the retailer, where the public may obtain them, have been taught by experience two things: First. That manufacturers have favorites to whom they will give a larger rebate than to wholesale dealers as a class, and generally the favorite is the person or corporation buying the greatest amount of goods, as strong firms or corporations like this plaintiff with a business of such dimensions that it claims damages in this case of one-half million of dollars. Second. *Page 16 
That there are wholesale dealers who for the purpose of getting clients away from their competitors will give them some part of such extra rebate. To remedy this difficulty was the leading object of the association, and it was sought to be accomplished by placing all the wholesalers upon an equality, so that one should have no advantage over the other in dealing with retail dealers, a result which seems altogether desirable, because it is in the line of fair dealing.
Indeed, the principle which they undertake to secure in this case by contract is like that which the Sherman Act attempted to secure in part, namely, equal freight rates to all interstate commerce shippers from common carriers. Before that act was passed the claim was made, and evidence was adduced in support of it, that rebates of such magnitude were allowed in occasional instances to favorite shippers that it contributed largely, if not entirely, toward driving others out of business, which was deemed so against public policy that Congress set about placing all parties on an equality as to the cost of shipping goods by interstate common carriers. Assuming, as we must, that this legislation was along proper lines for the purpose of protecting the principle of competition at a point where it seemed to be open to attack, it necessarily follows that it is in accord with public policy that these wholesale dealers may attempt to secure to themselves by contract like fair dealing on the part of the manufacturers, namely, that the rebate from the latter's "long prices," which the manufacturer allows as compensation to the wholesaler for distributing the goods to the retailers, shall be alike to all of them.
Before this association was formed, the complaint alleges, there was no fixed rebate, so that the manufacturer could and did allow to some a greater rebate than he did to others, and that such a course of dealing might operate to enable one wholesaler to profit greatly at the expense of the others goes without saying. These agencies for distribution between the manufacturer and the retailer, called the wholesale dealers, set about protecting themselves against what they deemed *Page 17 
unfair competition which resulted to them when a manufacturer saw fit to give some one dealer a much larger rebate than allowed to them as a class.
After forming the association they adopted, first, what is called in the complaint the rebate plan. By that plan the proprietor fixes the price of his article known as the "long price" and agrees to pay expressage and cartage to any point from which it may be ordered. The result is that if the long price is one dollar, the article is sold to the consumer at exactly that price in all parts of the country, which is very important to the proprietors, as they view it; and it must be borne in mind steadily that it is settled by authority that the proprietor of patent medicines has the right to fix the price at which his article shall go to the consumer, and a druggist who takes his articles for sale under an agreement that he will maintain the price is liable to respond in damages if he violates the contract. (Garst case and others, supra.) This plan was found to be insufficient to accomplish the desired result because distributors violated their contracts to sell at the "long price."
The Detroit plan was then devised, and all the proprietors were to sell their goods only to wholesale or jobbing druggists and not to the retail trade, and the committee on proprietary goods, which was composed of wholesale druggists, members of the association, agreed to furnish proprietors lists of wholesalers who could be depended upon to keep their contracts, and cut offlists of dealers who did not keep their contracts or who bought as a mere cover for dealers who were known not to keep their contracts. Under this plan every wholesaler is at liberty to buy all the goods he chooses of the manufacturers and can secure the same rebate as any member of the association, but he has to agree to the plan and he has to keep his agreement. This the plaintiff refuses to do, and, under the agreement which the manufacturers have with this association, they are not at liberty to give plaintiff the benefit of the rebate rate which they give members of the association, so long as he insists upon it that he will not abide by the *Page 18 
rules of the association. He can have all the goods that he wishes provided he pays "long prices" for them, but he cannot buy goods of the manufacturers who belong to this association at any less than the "long price;" in other words, he cannot get the benefit of the rebate unless he will agree to come in and he bound by the rules of the association.
Wholesalers of whom complaint is made are not, therefore, attempting to prevent plaintiff from enjoying all the opportunities for profitable trade which they enjoy, for they have invited him to become a member, indeed, have urged him to do so, and assured him in common with them of every advantage which they possess; but they do attempt to prevent him or any other dealer from making uncertain in its rewards, if not wholly unprofitable, the business of distributing proprietary articles among retail dealers.
Plaintiff once attempted to do business in accord with the association, but apparently reached the conclusion that it would be more profitable to him in the end to deal independently, and so he refused longer to be bound by the rules of the association, and, hence, the strife between the association and plaintiff which has culminated in this suit, plaintiff seeking to get the benefit of the same or a larger rebate than the members of the association without being bound by its rules, and the association doing its utmost to persuade the manufacturers not to give him the benefit of the rebate so long as he continues to oppose the policy of the association.
The position of the respective contestants is not far different, it will be seen, from that of the parties to the action of Nat. Protective Assn. v. Cumming (supra). Each is striving as against others to help itself or himself, and the question is here, as in that case, whether defendants in taking such action as they did to prevent plaintiff from getting the business they wanted are violating any rule of law. The wholesale dealers had the right to contract to secure such amount of rebate from the manufacturers as would reasonably compensate them for their services in distribution, together with the money invested. It is not claimed that the rate of compensation agreed upon *Page 19 
was unfair, and if there could be such complaint it is difficult to see who could make it except the manufacturers themselves, and they do not. It was clearly legal for any one of the wholesale dealers to sign the agreement and to bind himself to sell at such prices as the manufacturer of the article should see fit to name as the selling price; the right to fix the price belonging to the manufacturer it was proper for the wholesaler to agree to recognize that right and govern himself accordingly. He had the right to insist that in consideration of his performing those conditions, in accordance with the wishes of the manufacturer, the latter should not give to other dealers the rebate provided for members of the association unless such dealer should agree to be bound by the same conditions the members of the association took upon themselves; and he had a right to agree that in order to secure the due carrying out of the agreement according to the spirit thereof he would furnish to the manufacturer such evidence as he might secure from time to time tending to show that members of the association were directly or indirectly violating its rules, and that which he could do alone, he and they could do as members of the association, provided of course their coming together did not operate against the rights of the general public, but as against other selling agents like themselves, no other public interest being affected, there could be no doubt of their right to agree with each other to do what any of them could do alone. The members of the association not only had the right to inform the manufacturers about those members within it and the dealers without it who were violating the plans agreed upon, but they also had the right to take such legitimate and honorable means as were within reach to ascertain what persons were violating the rules, and to give notice of it to all of the members of the association. But that course operated, says the plaintiff, in effect to deprive me of the opportunity of buying goods on terms as favorable as the defendant wholesale dealers bought them. True, but it may be answered that you could buy them on the same terms as the *Page 20 
members of the association, which terms contain conditions governing the sale and the conduct of the members. Instead, you prefer to take the business chances to be found outside of the association, and, before the courts will help you, you must show that the plans of the association, or its conduct under those plans, are unlawful as against you.
The position attempted to be taken at this juncture by the plaintiff is, that granting the plans which the members of the association adopted were legal, nevertheless the wholesale dealers can be proceeded against in this suit, because they compelled some or all of the manufacturers against their will and inclination to refuse to sell their goods to plaintiff by threats, intimidation, blacklisting and other unlawful acts of the association. This language has a formidable sound, but subjected to the same analysis as was given to the word "threats" in the connection in which it was used in the Nat. ProtectiveAssociation Case (supra) it will prove to be without force. There are no threats alleged in this complaint on the part of defendants to do anything except that which they have a right to do, if the views so far expressed be sound, and we said in that case, and it is proper to repeat here, that a man may threaten to do that which the law says he may do, provided that, within the rules laid down in certain cases therein cited, his motive is to help himself. If there be any other "intimidation" of manufacturers than that to be found in the agreements and written plans of this association and the steadfast purpose on the part of its members to carry them out according to their letter, it is not to be found in the complaint. The term "blacklisting" refers to the course of defendants in notifying the trade in effect that the plaintiff is outside of the association, and prefers to stay out of it rather than be bound by the rules and regulations which other members of the trade regard as fairest and best to all, and insisting that the penalties of such a course shall be meted out to him, namely, that he shall not be allowed any rebate upon any of the manufacturers' goods so long as he shall retain that position. The facts alleged by them are true. The notification *Page 21 
is a part of the plan agreed upon by all, and the plaintiff courted it rather than do business on the same basis as his competitors, who together handled about ninety per cent of the proprietary articles sold.
The plaintiff's characterization of the acts of the defendants do not establish a cause of action against the defendants if the acts themselves do not, and clearly their acts do not, inasmuch as they are not aimed at preventing the plaintiff or any one else from participation in the trade to the same extent and on the same basis as themselves, but are intended simply to prevent plaintiff and others from enjoying the same or greater rebates than they get without bearing the burdens which they assume as a condition of receiving them, unless it may be said that the fact that they have agreed upon a basis of transferring the goods from the manufacturer that insures only reasonable profit and security to them as distributing agents is illegal and void. And this would seem to be impossible in view of the fact that the wholesale dealers have not secured the authority to, nor attempted to, restrict either the price or the quantity sold of the goods dealt in. One of these elements has always been present in the cases of the past in this state, in which it has been held that there existed a combination in restraint of trade, which was against public policy and void.
It will be seen, therefore, that this is a controversy between opponents in business, neither side trying to help the public. Nor will the public be the gainer by the success of either. The motive behind the action of each party is self-help. It is the usual motive that inspires men to endure great hardships and take enormous risks that fortune may come. In the struggle which acquisitiveness prompts, but little consideration is given to those who may be affected adversely. Am I within my legal rights? is as near to the equitable view as competitors in business usually come. When one party finds himself overmatched by the strength of the position of the other, he looks about for aid. And quite often he turns to the courts, even when he has no merit of his own, and makes himself for the time being the pretended champion of the public welfare *Page 22 
in the hope that the courts may be deceived into an adjudication that will prove helpful to him. Now, while the courts will not hesitate to enforce the law intended for the protection of the public because the party invoking such protection is unworthy, or seeks the adjudication for selfish reasons only, they will be careful not to allow the process of the courts to be made use of, under a false cry that the interests of the public are menaced, when its real purpose is to strengthen the strategic position of one competitor in business as against another.
I concur with Judge HAIGHT.
The judgment should be affirmed, with costs.