Court Opinion

ID: 8763328
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:15:48.062088+00
Date Added: 2024-06-11T17:01:42.673845
License: Public Domain

McCORMICK, Circuit Judge,
after stating the case as above, delivered the opinion of the court.
The question in this case which we deem it necessary to consider is: Was the contract between the parties void because made for the purpose of forming an illegal trust or combination? It is uniformly conceded that such a defense as this is a very dishonest one, and that it lies ill in the mouth of the defendant to allege it, and that it is only allowed for public considerations and in order the better to secure the public against dishonest transactions. But that to refuse to grant either party to an illegal contract judicial aid for the enforcement of his alleged rights under it tends strongly toward reducing the number of such transactions to a minimum; that the more plainly parties understand that, when they enter into contracts of this nature, they place themselves outside the protection of the law, so far as that protection consists in aiding them to enforce such contracts, the less' inclined will they be to enter into them, and in that way the public will secure the benefit of a rigid adherence to the law.
If the writing relied upon by the complainant is only a portion of the agreement that had been made between these parties, as the answer plainly alleges, although their agreement, in the first instance, was by parol, and only certain portions of it were subsequently reduced to writing, as averred and exhibited by that portion of the answer which was stricken out, the whole contract is none the less one and indivisible, just as though it had all been put in writing. If it had all been reT duced to writing, the very learned counsel for the complainant rvould scarcely have argued that his client might maintain an action by relying on that part of the contract which he claimed was valid, and might discard or omit to prove that portion which was illegal.. If the contract be as averred in the answer, and the complainant do not prove *331the whole of it, the defendant could prove it, as well the part lying in parol as that which was reduced to writing, so that the court might, upon an inspection of the whole contract, determine therefrom its character. The unity of the contract is not severed, or its meaning or effect in any degree altered, by putting part of it in writing and leaving the rest in parol. It would seem, therefore, that, in such case, to grant the complainant the relief which it here seeks would be, in substance, to enforce an illegal contract and one which is illegal because it is against public policy to permit it to stand.
What we have thus far presented is adopted almost literally from the opinion of Mr. Justice Peckham in McMullen v. Hoffman, 171 U. S. 649, 19 Sup. Ct. 839, 43 L. Ed. 1117. That learned justice had delivered the opinion of the Supreme Court in the cases of United States v. Freight Association, 166 U. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007, and United States v. Joint Traffic Association, 171 U. S. 505, 19 Sup. Ct. 25, 43 L. Ed. 259, and he was later the organ of the court in the case of Addyston Pipe & Steel Company v. United States, 175 U. S. 211, 20 Sup. Ct. 96. 44 L. Ed. 136, and in Montague & Company v. Lowry, 193 U. S. 38, 24 Sup. Ct. 307, 48 L. Ed. 608. In each of the cases cited, but especially in the Joint Traffic Association Case, all of the contentious which have been urged on this question in this case were exhaustively considered, and, we think, were concluded against the contention of the complainant (appellee).
Soon after the passage of the act of July 5, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200], the questions here involved were considered by flie Circuit Court in tills circuit for the Eastern district of Eouisiana, Judges Pardee and Billings sitting at the hearing, on an application for equitable relief very similar to the relief sought in this case. We quote, from the syllabus, the following language:
“Defendant and his partner sold tlioir bakery business to complainant corporation, receiving payment in its stock, and defendant leased to it the premises where the business was conducted, and eonlraotod to carry it on as the purchaser's agent for a salary. After operating under this amuigomont for a time, lie repudiated the sale, resumed business under rlio old ilrm nana, and refused to account to complainant. The bill was brought to enjoin him from asserting a hostile claim, for an accounting, and a receiver. Defendant and his partner, as intervener, tiled a cross-bill for rescission of the sale, tor-fraudulent representations, and tendered back the stock. Complainant was practically a Trust,’ organized to monopolize the business, and liad already com trol of 35 leading bakeries in 12 different states. Held, that, while a case was made for a receiver, pending litigation between ordinary parties, the. prayer would be denied, as equity would not encourage a combination in restraint of trade, and probably illegal, under Act Cong. July 2, 1890. to protect trade and commerce against unlawful restraints 'and monopolies.’ ” American Biscuit & Manufacturing Company v. Klotz (C. C.) 44 Fed. 721.
It is contended for the complainant (appellee) that, if such iniquity exists in the organization of that company as is averred by the answer, the remedy is by direct proceeding by the state to dissolve it, or to punish the guilty parties, in answer to this contention, we cominead the parties who make it to a fuller and more unbiased study of the reported decisions we have cited. It is also urged that the United Fruit Company is not a party to this proceeding, and that therefore the matter averred may not be considered in the disposition of this suit. We do *332not so read the pleadings. The bill was supplemented by the answer. It is the function of the chancellor to look through the form to the substance of the matter in which he is asked to act. Moreover, this suggestion, by a short analysis of its probable practical working, resolves itself into the former contention which, as we have indicated, we consider to be settled against the complainant (appellee) by the decisions which we have cited.
The averments of the answer show that the United Fruit Company has combined and dominates substantially all of the other persons, individuals, firms, or corporations engaged in the trade of importing tropical fruits from Central and South America and the Antilles; that there are 25 or more constituent agencies in this combine to monopolize the procuring by production and purchase, and the carriage and distribution to consumers, of these articles in universal use. The United Fruit Company, which dominates-all of them, may act only through some one or more of them in its dealings with the public or outsiders. If, therefore, the so-called separate contracts of these numerous constituent agencies can and must be enforced by our courts of law and equity, the public policy of the country which it is so important to protect may indeed be enforced only through the action of the state as a party to a direct proceeding.
The cardinal principles of jurisprudence are as firmly settled as the Ten Commandments and the Roman Tables, but pleading, practice, and procedure must grow with the growth of civilization and commerce. The present-and threatened development of producing, carrying, and trading corporations transcends recorded precedents. Their number, dimensions, and omniverous character have, in large measure, absorbed or devoured individual natural persons having capacity and inclinations for trade, until an action at law or suit in equity is rarely reported which does not show a contest between corporations or by or against a corporation or system of corporations. These unnatural persons, as they may well be called, when legally organized, and while conducting lawful trade in a lawful manner, have the right to judicial protection and relief, in like measure as natural persons enjoy, and are subject to the same legal and equitable limitations. The state may and will bring, in its courts, actions and suits to enforce its statute laws and its public policy against them, when necessity requires, to the extent that time and opportunity permit. But the harvest is great, the laborers are few, and time is short. These parties are wonderfully strong. Age does not impair their strength. They perennially recruit it from the highest ranks of the legal profession, with veteran experts in strategy and tactics, both grand and elementary. There are necessary delays in litigation, inherent weaknesses in its best machinery, obstructions will supervene, and all these elements are capitalized to the last extent of their earning capacity, by these highly organized unnatural persons, who decide and act with the promptness and prescience of the most superior human intellect. Direct proceedings by the state are overtaxed. The courts, .especially the courts of equity, should not pose always as the fabled goddess, but keep an eye single to these exigent conditions and aid the state, as they rightly may, by withholding help or grace from graceless and hurtful dealings.
*333Other decisions of the Supreme Court than the leading cases we have cited furnish good reasons for, and illustrations of, the application of the doctrine now deduced from the recent statutes and the ancient common law. Northern Securities Co. v. United States, 193 U. S. 197, 24 Sup. Ct. 436, 48 L. Ed. 679; Swift & Co. v. United States, 196 U. S. 375, 25 Sup. Ct. 270, 49 L. Ed. 518. A recent case reported from the Circuit Court of Appeals for the Sixth Circuit treats the question we are considering with great ability, and gives the result of the decisions of the Supreme Court with a clearness and force most persuasive to us. Continental Wall Paper Co. v. Voight & Sons Co. (C. C. A.) 148 Fed. 939.
We conclude that the lower court erred in sustaining the exceptions to the defendant’s answer; that the decree appealed from must be reversed, and the cause remanded to the Circuit Court, with direction to overrule the exceptions, and thereafter to proceed agreeably to equity and the views expressed in this opinion.
And it is so ordered.