Court Opinion

ID: 9637317
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:03:11.370433+00
Date Added: 2024-06-11T18:09:55.268220
License: Public Domain

MAJOR, Circuit Judge
(dissenting).
I think this judgment should be reversed upon two grounds: (1) the evidence upon which plaintiff relies as proof of damage was erroneously admitted, and (2) even though such evidence was properly admitted, it was insufficient to establish damage as a matter of law but at most presented an issue of fact for the jury’s determination.
It must be kept in mind that the only issue submitted to the jury was whether plaintiff was required or compelled to reduce the price of its serum in order to meet the unfair competition occasioned by the alleged unlawful conduct of the defendants. In other words, plaintiff’s position in this respect rests solely upon the basis that it was required or compelled to make such reduction and these reductions represent the amount of plaintiff’s damages as embodied in the judgment.
As pointed out by the majority, plaintiff’s serum was sold to its members through druggists who acted as plaintiffs ware-housemen and who usually received the serum on consignment. In other words, the drugstores were acting as plaintiff’s agents in making such sales.
The only testimony offered by plaintiff as the basis for its right to recover damages is that of its president, Huff, and its assistant sales manager, Davis. Neither of these witnesses had anything to do with or any contact with plaintiff’s customers. The latter, in making purchases, dealt directly with the drugstores acting as plaintiff’s agents. The testimony of Huff and Davis upon which plaintiff relies was offered and admitted solely as basic proof that plaintiff was required or compelled to reduce the selling price of its serum, and as a result thereof sustained the damage complained of. No other proof was offered on this phase of the case. This testimony is related by the majority and need not be repeated. Reduced to its naked form, it is that the witnesses (Huff and Davis) received complaints from druggists that they could not sell plaintiffs serum at 75fS in competition with the Farm Bureaus who were selling at 65^. Upon such complaint being made, plaintiff ordered its druggists to reduce the price to 65^.
The opinion states: “Defendants contend that the court erred in permitting plaintiff’s witnesses to testify as to the reasons given to the plaintiff by their druggists why the latter could not sell plaintiff’s serum at 7$4, which resulted in plaintiff’s reduction in price. They urge that such evidence is hearsay, self-serving and thus incompetent. This was not error. Such evidence is an exception to the hearsay rule and is well recognized.” A number of authorities are cited in support of this conclusion.
In my opinion, the conclusion is erroneous and the authorities cited do not support it. The first and most relied upon case is that of Lawlor v. Loewe, 235 U.S. 522, 536 35 S.Ct. 170, 173, 59 L.Ed. 341, where the court stated: “The reasons given by customers for ceasing to deal with sellers of the Loewe hats, including letters from dealers to Loewe & Co., were admissible.”
The opinion does not disclose the exact nature of this testimony. It apparently is confined to statements by customers, and includes dealers in such category. Neither does the opinion indicate the purpose for which this testimony was admitted. Evidently, however, it was not for the purpose of proving a basis for plaintiff’s right to recover. This view is fortified by a subsequent decision of the Supreme Court (written by the same Justice) in Buckeye Powder Co. v. E. 1. DuPont De Nemours Powder Co. et al., 248 U.S. 55, at page 65, 39 S.Ct. 38, 40, 63 L.Ed. 123, wherein the court stated: “Several exceptions were taken to the exclusion of statements by third persons of their reasons for refusing or ceasing to do business with the plaintiff. * * * But the exclusion in this instance was proper. The statement was wanted not as evidence of the motives of the speakers but as evidence of the facts recited as furnishing the motives. Lawlor v. Loewe, 235 U.S. 522, 536, 35 S.Ct. 170, 59 L.Ed. 341 * * *”
Taking these two cases together, it appears that a witness may testify as to the reasons assigned by a customer for refusing or ceasing to do business with the plaintiff. It is admissible, however, only for the purpose of showing the customer’s motive and not as proof of a basis for recovery. As I understand, Wigmore on *916Evidence, 3d Ed., Vol. 6, Par. 1729(2), makes a similar distinction.
In Greater New York Live Poultry Chamber of Commerce et al. v. United States, 2 Cir., 47 F.2d 156, 159, objection was made to the “admission over objection of the testimony of witnesses for the prosecution as to reasons given by receivers for their refusal to sell to recalcitrant market-men.” The court stated: “Such statements of reasons, though hearsay, are admissible to prove the state of mind of the declarant if that be in issue.” (Citing the Lawlor case, supra.) The court went on to point out that the defendants would have been entitled to an instruction, specifically “warning the jury not to consider these statements as evidence of the truth of the matters asserted therein.” The court further held that because the defendants had not requested such an instruction, they were not in a position to complain. Other cases cited by the majority are Hubbard v. Allyn, 200 Mass. 166, 86 N.E. 356, and Brannen v. Bouley et al., 272 Mass. 67, 172 N.E. 104, in each of which the court held admissible the reasons given by customers for refusing to buy from or deal with the plaintiff. In the Hubbard case, after so holding, the court pertinently points out (page 174 of 200 Mass., page 360 of 86 N.E.) : “It was not necessary for the plaintiff to show, as a part of his case, the names of the customers. This was a proper subject for cross-examination, and it does not appear that the defendant was deprived of his rights in this respect.”
The Illinois Supreme Court, in The Carpenters’ Union v. The Citizens Committee, 333 Ill.. 225, 164 N.E. 393, 63 A.L.R. 157 (not cited by the majority), similarly interprets the rule as to when and the purpose for which hearsay evidence is admissible. The court (page 256 of 333 Ill., page 404 of 164 N.E.) stated: “This testimony was clearly competent for the purpose of showing the motive of the employer’s action. (Citing cases, including the Lawlor case, supra.) The testimony did not prove that the bankers would hold up the loan of the employer, or that representatives of the Citizens’ Committee had demanded that their men be put on the job * * *. It did show the state of mind and motive of the different employers in discharging their employees and it was competent to be received for that purpose, leaving the acts on which their fears were based to be proved by other evidence.”
It should be kept in mind in the instant case that neither a druggist nor a customer was offered as a witness. If a druggist had been offered, I think under the rule announced in the authorities relied upon by the majority he could have testified as to the reasons assigned by customers as to why they ceased or refused to purchase plaintiff’s product. Such testimony would have been proper for the limited purpose of showing the motive or the state of mind of the customer but not as proof of a right to recover. In that contingency, the defendants, as pointed out by the Massachusetts court in Hubbard, supra, would have had an opportunity to cross-examine the witness as to what customers had refused to buy, their reasons therefor and other relevant factors concerning such refusal. There is no reason apparent from the record why plaintiff could not have shown by its druggists why it was necessary, if such be the fact, that its serum price be reduced. Defendants were entitled to cross-examine such witnesses and it would appear to constitute a very fertile field in this respect.
Moreover, the so-called hearsay testimony admitted amounted to nothing more than the opinion or conclusion of plaintiff’s druggists that a reduction in price was necessary. This was testimony of a self-serving opinion made by the druggists who naturally were interested in obtaining permission from plaintiff to sell the latter’s serum at the lower price. Moreover, the effect of the testimony is that the druggist was of the opinion that it was necessary to reduce the price because of information received from customers that they otherwise would not purchase. The testimony considered in this light is not merely hearsay but is hearsay heaped upon hearsay.
So, in my opinion, the evidence complained of was no exception to the hearsay rule, was perhaps inadmissible for any purpose and certainly not for that for which it was offered. If my view in this respect is correct, there should have been a directed verdict for the defendants, because admittedly there was no other testimony which would afford any basis for recovery. True, plaintiff offered in evidence its books and accounts for the purpose of Showing the amount of damages allegedly sustained but such books merely reflect the situation based upon the contention that plaintiff was compelled to reduce its price. They *917of course furnish no support for this basic contention.
Assuming that the view thus expressed as to the admissibility of this testimony is erroneous, I still think the judgment should be reversed. This is so for the reason that plaintiff’s assertion that it was required or compelled to reduce its price in order to meet Farm Bureau competition presented an issue of fact for jury determination. In fact, this was the sole issue submitted to the jury. Predicated upon this issue, the court submitted two questions to be answered by the jury, namely, (1) was the plaintiff damaged as the result of the defendants’ violation of the Robinson-Pat-man Act? and (2) if so, in what amount was the plaintiff so damaged? The jury answered the first question in the negative, which left it unnecessary for it to consider the second question.
Thereafter, the trial court sustained the plaintiff’s motion for judgment notwithstanding the verdict, assessed plaintiff’s damages and entered the judgment in dispute. I suppose that the court set aside the jury verdict on the theory that no question of fact was involved, in other words, that plaintiff had established its right to recover as a matter of law. The majority of this court, in approving the action of the court below, apparently are of the same view; in fact, it is stated in the opinion that the court would have been justified in directing a verdict for the plaintiff.
In my view, a consideration of plaintiff’s testimony alone presents a jury question on the vital issue as to whether plaintiff was required or compelled to reduce its price. Accepting it at its face value, it carries little probative weight. As already pointed out, it is based solely on the hearsay testimony coming from plaintiff’s druggists who naturally were interested in obtaining permission from plaintiff to sell serum at the reduced price. It was a self-serving statement on their part. As admitted by plaintiff’s witness Huff on cross-examination : “I wouldn’t say they (the druggists) quit us cold and took you (the Farm Bureaus) on, but I know that was one of the arguments to get this price of ours down.” Huff also admitted that there were fifteen drugstores in fifteen different counties in Illinois in which the Farm Bureau was also located, where no reduction in price was made. In six of these counties, the Farm Bureau had offices in the same town with plaintiff’s druggists. He also admitted that the Farm Bureau had no office or representative in twelve of the thirty-six towns where plaintiff reduced its price. On direct examination Huff testified that plaintiff had not reduced its price in any state other than Illinois, tie later admitted, however, that the price was reduced at three different towns in Iowa, in the same manner as it had been in Illinois. Admittedly, it had no competition from the Farm Bureau or the defendants in Iowa.
He also admitted that when the price was once reduced it was never increased, irrespective of any changed circumstances, and that there were other factors which entered into the matter of a reduced price. For instance, it was not required to reduce its price in some towns where it was met with Farm Bureau competition because plaintiff’s druggists were better salesmen than those of the Farm Bureau or that the latter were not active in pushing the sale of its serum. Without going into further detail, it is sufficient to observe that the testimony of both Huff and Davis is in many respects inconsistent with the assertion that plaintiff was required or compelled to reduce the price of its serum. In my opinion, a trier of the facts was not bound to accept as conclusive the hearsay and opinionated evidence of these witnesses that plaintiff was so compelled. If their testimony presented no issue of fact for a jury on this vital issue and a court was bound to accept it as a matter of law, it would appear that plaintiff’s decision on this issue was final.
Other factors exist which strengthen my conviction that a jury question was involved. I refer particularly to circumstances having to do with the form of plaintiff’s organization as compared to that of the Farm Bureaus and the special character of competition, if any, which existed between them. Huff testified in effect that plaintiff did not look to members of the Farm Bureau for customers but was only interested in preserving its own customers, evidently referring to non-Farm Bureau members. Plaintiff, while terming itself a cooperative association, is in reality a pseudo-association possessed of none of the essential characteristics of such an organization. Its so-called membership is illusory. Any person, fanner or otherwise, becomes a member at the time and only at the time of a purchase of plaintiff’s serum. Such so-called membership fee is *918250, and even this amount is not actually paid.
In contrast, the county Farm Bureaus in connection with their parent body, the Illinois Agricultural Association, are genuine, bona fide cooperative organizations actually engaged in business not for profit but for the benefit of their members through a multiplicity of services rendered. Only those actually engaged or interested in agriculture are eligible for membership, which may be acquired upon application and the payment in advance of an annual fee of $15. Upon the failure of a member to make such payment annually thereafter, his membership is canceled. The dealings of the Farm Bureaus, including the sale of serum, are solely with its members.1 Thus the sale of serum made through the various Farm Bureaus was to a select and limited class of persons, that is, to those who were members. On the other hand, plaintiff’s customers were found among the public at large, with no restriction of any kind on the right of any person to purchase its serum.
Assuming that plaintiff in the sale of its serum was in competition with the Farm Bureaus, to hold that it was as a matter of law required or compelled .to reduce its price is to ignore the realities of the situation.
To illustrate, suppose that a person desirous of purchasing serum goes to one of plaintiff’s agents for such purpose. Of course, he is not likely to be a member of the Farm Bureau for that class of customers are not sought by plaintiff and, furthermore, there would be no occasion for a Farm Bureau member seeking to purchase from plaintiff. The prospective customer is told that the price of plaintiff’s serum is 750. Is plaintiff required to reduce its price to 650 in order to sell because a member of the Farm Bureau can purchase for 650 from the organization of which he is a member ? A negative answer to this question appears reasonable from the very nature of the situation. This is so for the reason that the Farm Bureau will not sell to plaintiff’s prospective customer. He can do one of three things in so far as the parties to this suit are concerned: (1) purchase from the plaintiff at its price, (2) pay $15 for a membership in the Farm Bureau and thus qualify to purchase its serum, or (3) do without serum. It is not reasonable to think that he would pay the fee necessary to join the Farm Bureau for the purpose of saving a few cents or dollars on a purchase of serum, and it is just as unreasonable to think that a person in need of serum would do without it because of plaintiff’s price.
To illustrate further, A is desirous of purchasing a cow. Farmer B has one for sale, priced at $75, which he is willing to sell to anybody. Farmer C also has for sale one of equal quality, priced at $65, which he is willing to sell only to members of a designated organization. A is not a member of such ‘organization. Is B compelled to reduce his price in order to meet that of C? If a court was called upon to answer this question as a matter of law, I think it would be upon safer ground to answer it in the negative. Assuming, however, that the question is an arguable one as it perhaps is, it would appear to me to present an issue of fact. Of course, whether B sold his cow to A for $75 might depend upon many factors, including his experience in selling cows (some of these farmers are mighty good cow salesmen) and upon how badly A was in need of a cow. Also, the fact that C’s cow was lower priced might afford A grounds for arguing with B that the price of his cow was too high, just as the Farm Bureau price of serum might afford the prospective customer of plaintiff an argument by which he could persuade plaintiff to reduce its price. Whatever potentialities such an argument might possess, it would not compel B as a matter of law to reduce the price of his cow any more than it would compel plaintiff to reduce that of his serum.
I think the court properly submitted to the jury the issue as to whether plaintiff was required or compelled to reduce the price of its serum. The question having been properly submitted, the jury’s answer thereto should have been accepted. It follows, in my view, that the court’s action in entering a judgment, notwithstanding the verdict, was erroneous and that it should be reversed. It would seem to follow under Rule 50(b), Federal Rules of Civil Procedure, as construed in Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 61 S.Ct. 189, 85 L.Ed. 147, that a new trial would result from such reversal.

 The record discloses that abput 2% of the sales of serum by the Farm Bureaus was to persons other than members. This was the result, however, of errors on. the part of office employees.