Court Opinion

ID: 9418145
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:10:06.954428+00
Date Added: 2024-06-11T17:21:56.184217
License: Public Domain

Me. Justice Holmes,
with whom concurred
Me. Justice Beewee, Me. Justice White and Me. Justice Peckham, dissenting.
This action is for goods admitted to have been sold and delivered by the plaintiff to the defendant, and the question arises, as has been explained, on demurrer to the third defense. The elements of that defense may be stated in a few words. Nearly all the manufacturers of wall paper in the United States formed a combination which, under the present policy of the law, was an illegal attempt to restrain and monopolize trade in and among the several States. As a part of the scheme the plaintiff corporation was created, which by the agreement became the purchaser of the products of the constituent companies, and was to sell the same, although the constituent companies continued to manufacture and to carry on the business of soliciting orders. The only material facts about this agreement are that under it the plaintiff got title to the goods, that it fixed prices at which goods were to be sold, and that it contemplated .compelling the jobbers and others who bought to purchase at those prices, if they were to get any paper at all. The conspirators threatened and had the power to drive any jobber out of business who did not come in.
In pursuance of the combination an'd its purpose the defendant, a jobbing house, and all’other jobbers, were compelled to sign a contract which, in effect, bound them to buy all the wall paper needed in their business from the plaintiff at the above-mentioned prices, and which made it an “essential condition of this agreement” that they should not sell at lower prices *268or upon better terms than those at which the plaintiff sold. After these two contracts were made the defendant ordered the goods in question at the prices named. . It is alleged that those prices were, unreasonable, and it is alleged, repeatedly and with much detail, that all the arrangements were made and all the business was done in furtherance of the plan set forth; contrary to the law of the United States and of the States concerned, and in violation of the defendant's rights, this suit being the final step in the attempt to carry out the plan.
It seems to me that the foregoing facts show no defense. I" will consider them in their successive degrees of connection with the affair, and in the first place will take up the terms of the actual contracts in suit. These were ordinary parol sales made by the owner of goods. The suit was not upon the general agreement between the plaintiff and defendant. That by itself sold nothing, and it may be questioned whether it purported absolutely to bind the defendant to buy a roll of paper. See Dennis v. Slyfield, 117 Fed. Rep. 474; Sterling Coal Co. v. Silver Spring Bleaching & Dyeing Co., 162 Fed. Rep. 848, 850. The actual contracts by which the plaintiff bound itself to deliver, anil the sales under which it did deliver the specific goods for which it seeks to recover the price, were made after .the making of the general agreement, as it is apparent on the face of that agreement that they must have been, and as is alleged by the answer in so many words. Each was a separate transaction. There is nothing alleged concerning the terms of these parol.sales that has any element of illegality about it.
Next as to the effect of the general agreement between the plaintiff and defendant. It is alleged that after it was made the members of the combination solicited, received and filled orders, and .charged the prices fixed in the original combination agreemerit. It is not alleged that either agreement was referred to even by implication. The sales are left by the answer as so many distinct transactions. But if, in order to help the defendant to escape, we are to infer'that the orders were given with implied reference to the general contract, what ef*269feet could such a reference have? Plainly only to fix the price, .and for this purpose it was simply a schedule, figures on a piece of paper or in the memory of the parties, which were adopted by pointing to them in some way, as if they had been written on a blackboard. It did not matter whether the document pointed at was lawful or unlawful, as the whole business was done by the later contracts. See Interstate Consolidated Street Ry. Co. v. Massachusetts, 207 U. S. 79, 84, 85.
If the condition in the general agreement between the plaintiff and defendant made it bad, still it went only to that agreement and to the plaintiff’s promise to sell at certain prices, not' to any subsequent sales, or to the defendant’s title to goods got under subsequent sales. If it had been incorporated in any way-into the specific sales, it would be necessary to consider the case of Cincinnati, Portsmouth, Big Sandy & Pomeroy Packet Co. v. Bay, 200 U. S. 179, 185. But no such incorporation is alleged, or in any probability could have been alleged. So I think that I may assume that the parol sales were made no worse, on their face, by any reference to the content of the general agreement. And I may add that the unlawfulness of the general agreement would not make the sales bad from the outside, so to speak, if that was all that there was against them. A lawful purchase is not made unlawful merely by being the fulfillment of an unlawful contract.
It has been suggested that the plaintiff was not the real seller and only got its standing from the general agreement with the defendant, and that therefore it had to rely upon an .illegal' contract to -ma,ke out its case/ But the defense does not deny that the plaintiff .became the owner of the goods or that the.manufacturers sold in its name as the original combination provided. It is true that it says that the arrangements were made with a view of disguising the real transaction and purpose, and that really the business was to be done by the manufacturers, as I'have'stated. But it adds that payments were to be made to the plaintiff, and it nowhere suggests that the first contract set forth did not operate, or that the plaintiff *270did not get the title it professed to transfer. Its illegality would not prevent the .title passing. If the defendant meant to deny that it bought from the plaintiff goods which the plaintiff owned, it was very easy to deny it and to leave the plaintiff to set up the agreement if it did not join issue, as it naturally would. As' the defense stands, I think it means, as I have no doubt is the fact, that the technical legal title to the goods was in the plaintiff, and that the defendant 'purported to contract with it, the manufacturers selling in its name..
I now pass to the more remote considerations that are supposed to have a greater effect. It is said that the specific sales, the general agreement and the original combination all are steps in one illegal plan, and that the plan gives character to the whole. But we must be more precise. The plaintiff alone was party to the plan. The defendant represents itself as a victim, and rays that the plan was against its rights. On-what ground then does the illegal purpose of the plaintiff warrant the defendant in professing to buy its goods and then refusing to pay for them?
The plaintiff’s .unlawful purpose did not make it unlawfu to buy the plaintiff’s goods. It is decided, if decision is necessary, that a purchaser cannot escape merely on the ground' that the seller is an unlawful trust. Connolly v. Union Sewer Pipe Co., 184 U. S. 540; Chattanooga Foundry & Pipe Works v. Atlanta, 203 U. S. 390, 397. I repeat that it is not alleged that the defendant in any way shared the plaintiff’s intent, but to go further than I negd, I will assume that it may be taken to have made the general contract with knowledge of that intent. Büt it cannot be contended that, therefore, it was party to a transaction illegal for that reason. Whenever a party knows that he .is buying from an illegal trust, and still more when he buys at a price that he thinks unreasonable, but is compelled to pay in order to get the goods he needs, he knows that he is doing an act in furtherance pf the unlawful purpose of the trust, whiph always is-to get-the most it can for its wares. But that knowledge makes no difference, because the policy of not *271furthering the purposes of the trust is less important than the policy of preventing people from getting other people’s property for nothing when they purport to be buying it. And if knowledge of the purchaser that he is furthering the purpose of the trust makes no difference, it makes no difference whether he is glad or sorry for the result. A. man does not make conduct otherwise lawful unlawful simply by yearning that it should be so. In this case however the defendant was an unwilling accessory, exactly as Dee was in the Connolly Case.
■ The effect of the defendant’s .knowledge of the plaintiff’s scheme is not greater because it signed the illegal general contract. I think that I have shown that the illegality of that •contract, taken by itself, did not make the.specific sale illegal, and from the point of view that all that was done was a carrying out of the plaintiff’s illegal scheme, it does not matter to the legality of the sales whether a particular previous step was legal or not. If knowledge that the plaintiff was attempting to monopolize, and that it sold at prices fixed in aid of the intent' would not exonerate the defendant when it yielded to its necessities and bought, the same knowledge would have no greater effect if the same necessities led it to agree beforehand to do what it did.
Perhaps, in order to answer every aspect that this rambling defense presents, I ought to say in conclusion that the allegations that the price was unreasonable, and that the plaintiff threatened and had power to drive jobber's out of business that did not come into its arrangement, is not stated in such form as to make a case of duress. I think that that would have been the strongest ground oh which the defense could have been put. Courts and legislation sometimes have recognized that the so-called freedom to contract or not may be made illusory by the economic situation of one of,the parties. Schlemmer v. Buffalo, Rochester & Pittsburg Ry. Co., 205 U. S. 1, 12. It would be extending the recognition further than it yet has been extended, so far as I am aware, to apply it to a case like this. But I express no opinion upon its possible ap*272plication because, as I have said, the allegations are not directed to that end, and do not sufficiently show that the specific purchases were induced by fear. Moreover, as such duress, like fraud, goes only to motives, The Eliza Lines, 199 U. S. 119, 131, if the frightened or defrauded party would rescind he must restore the consideration, or at least be ready to pay the reasonable price, of neither of which is there any hint.
I think that this decision must mean that Connolly v. Union Sewer Pipe Co., 184 U. S. 540, ought to have been decided the other way. There, as here, there was, or was assumed to be, an illegal trust. In furtherance of the purposes of the trust a general agreement was made between the trust and the defendants, the purchasers, which required defendants to buy from the plaintiff alone at prices alleged to be unreasonable, they receiving a rebate upon that consideration, and which fixed a price at which the defendants would sell. There was just as much of a scheme and just the same scheme in that case as in this.' In both the defendants cooperated as victims to the monopoly in precisely the same way. The facts spoke for themselves, and were the same. Nothing is added to the case by calling the arrangements set forth a scheme,' but similar language was used in the former case, as appears from the record. The contract will be found in the same record. It was assigned as error and argued that the .Circuit Court ruled that the said contract, again set forth, was not void. For these reasons I feel compelled to dissent from the judgment of the court. I am authorized to say that Mr. Justice Brewer, Mr. Justice White' and Mr. Justice Peckham concur in this dissent.