Frey & Son, Inc. v. Cudahy Packing Co., 256 U.S. 208 (1921)

Alleging the existence of an unlawful contract, combination or conspiracy between the Packing Company, manufacturer of “Old Dutch Cleanser,” and various jobbers for the maintenance of resale prices, and relying upon the Sherman Act (c. 647, 26 Stat. 209) as interpreted in Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373, Frey & Son, Inc., instituted this action in the District Court of the United States for Maryland to recover threefold damages. Under an elaborate charge the issues were submitted to the jury for determination. Judgment for p. 210$2,139.00 entered (June 22, 1917) upon a verdict for plaintiff was reversed by the Circuit Court of Appeals July 16, 1919 (261 Fed. Rep. 65)—after decision of United States v. Colgate & Co. (June 2, 1919), 250 U. S. 300, and before United States v. Schrader's Son, Inc., 252 U. S. 85. Plaintiff in error reserved its right of review here, waived a new trial and consented to entry of final judgment for the Packing Company. Thomsen v. Cayser, 243 U. S. 66.

“I can only say to you that if you shall find that the defendant indicated a sales plan to the wholesalers and jobbers, which plan fixed the price below which the wholesalers and jobbers were not to sell to retailers, and you find defendant called this particular feature of this plan p. 211to their attention on very many different occasions, and you find the great majority of them not only expressing no dissent from such plan, but actually cooperating in carrying it out by themselves selling at the prices named, you may reasonably find from such fact that there was an agreement or combination forbidden by the Sherman Anti-Trust Act.”

I am constrained to dissent from the opinion and judgment of the court. The action was brought by plaintiff in error, in part to recover threefold damages under § 7 of the Sherman Anti-Trust Act of July 2, 1890, c. 647, 26 Stat. 209, 210, because of injuries sustained in its business by reason of an alleged combination or agreement for the maintenance of prices made between the Packing Company and various wholesalers and jobbers in its product known as “Old Dutch Cleanser.” The declaration contained a second count, based upon alleged discrimination in violation of the Clayton Act of October 15, 1914, c. 323, §§ 2, 4, 38 Stat. 730, 731; but this calls for no special notice. A judgment rendered by the United States District Court upon the verdict of a jury in favor of plaintiff was reversed by the Circuit Court of Appeals (261 Fed. Rep. 65) upon the ground that the acts of defendant and its associates amounted to no more than an announcement in advance that customers were expected p. 212to charge prices fixed by defendant upon penalty of refusal to sell to an offending customer, observance of the request by customers generally, and actual enforcement of the penalty by refusing to sell to such customers as failed to maintain the price; and hence that under the decision of this court in United Stales v. Colgate & Co., 250 U. S. 300, there was no ground of recovery under the Anti-Trust Act.

The instruction to which error is attributed related to the question whether a combination between defendant and the wholesalers and jobbers for the purpose of maintaining resale prices had in fact been shown. After referring to the method pursued by defendant in marketing “Old Dutch Cleanser,” and stating that under the law defendant could not be held liable under the first count unless it was a party to a contract or combination or conspiracy to fix and maintain prices; that defendant denied it was a party to any such combination, contract, or conspiracy, and insisted it had merely notified the jobbing trade what prices it thought were the lowest at which jobbers would resell its product at sufficient return p. 213to make it worth their while to push the sale of such product; that plaintiff admitted that, with reference to most of the jobbers at least, there was no written and signed agreement on the subject, and none couched in any formal or express terms; but that defendant from time to time had issued circulars to the trade urging the importance of maintaining 11 uniform and fair jobbing and retail prices and trading provisions” and stating that “any sales by jobbers at special prices would . . . demoralize prices and disturb the entire business in these products,” and that “uniformity and equality, as to terms, delivery and price is essential. It is therefore required of our distributing agents that they fully cooperate with us in this direction, as per terms, conditions and prices laid down in our published General Sales List;” and that upon bills sent to wholesalers by defendant there was stamped a notice that “All your quotations, bids, sales and invoices for Old Dutch Cleanser either to jobbers, semi-jobbers, retailers or consumers, should be at a rate not lower than laid down in our published General Sales List;” the trial judge proceeded, as to the particular question whether in fact there was a combination, to speak thus: “I can only say to you that if you shall find that the defendant indicated a sales plan to the wholesalers and jobbers, which plan fixed the price below which the wholesalers and jobbers were not to sell to retailers, and you find defendant called this particular feature of this plan to their attention on very many different occasions, and you find the great majority of them not only expressing no dissent from such plan, but actually cooperating in carrying it out by themselves selling at the prices named, you may reasonably find from such fact that there was an agreement or combination forbidden by the Sherman Anti-Trust Act.”

It is elementary that, in order to lay foundation to review by writ of error the proceedings of the courts of the United States in the trial of common-law actions, the questions of law proposed to be reviewed must be raised by specific, precise, direct, and unambiguous objections, so taken as clearly to afford to the trial judge an opportunity for revising his rulings; and that a bill of exceptions not p. 215fulfilling this test will furnish no support for an assignment of error. To quote from some of the decisions: “One object of an exception is to call the attention of the circuit judge to the precise point as to which it is supposed he has erred, that he may then and there consider it, and give new and different instructions to the jury, if in his judgment it should be proper to do so.” Beaver v. Taylor, 93 U. S. 46, 55. “While it is the duty of this court to review the action of subordinate courts, justice to those courts requires that their alleged errors should be called directly to their attention, and that their action should not be reversed upon questions which the astuteness of counsel in this court has evolved from the record. It is not the province of this court to retry these cases de novo.” Robinson & Co. v. Belt, 187 U. S. 41, 50. “It has been too frequently held to require the extended citation of cases that an exception of this general character will not cover specific objections, which in fairness to the court ought to have been called to its attention, in order that if necessary, it could correct or modify them. ... In such cases it is the duty of the objecting party to point out specifically the part of the instructions regarded as erroneous.” McDermott v. Severe, 202 U. S. 600, 610. “The primary and essential function of an exception is to direct the mind of the trial judge to a single and precise point in which it is supposed that he has erred in law, so that he may reconsider it and change his ruling if convinced of error, and that injustice and mistrials due to inadvertent errors may thus be obviated. An exception, therefore, furnishes no basis for reversal upon any ground other than the one specifically called to the attention of the trial court.” United States v. United States Fidelity & Guaranty Co., 236 U. S. 512, 529. See, also, Guerini Stone Co. v. Carlin Construction Co., 248 U. S. 334, 348; FiUippon v. Albion Vein Slate Co., 250 U. S. 76, 82.

Not only the trial judge, but the opposing party has p. 216rights that one who objects to the course of the proceedings is bound to respect, if he seeks a review by writ of error. To permit the result of a trial to be set at naught because of an objection that has no proper relation to any ruling made unless it be taken in a sense entirely variant from the language expressed by objecting counsel, would render the fair and orderly conduct of a trial impossible and place a premium upon ambiguity and even trickery. Upon the present record, it would be most unjust to the plaintiff, as well as to the trial judge, to call upon the latter, wearied as he must have been in the course of such a trial, to recognize in the one hundred and fifty-fourth objection a challenge of the legal accuracy of an instruction that he had expressed in language so very different.

Reading the criticized instruction in the light of the other parts of the charge, it amounted to no more than p. 217telling the jury that if defendant had a sales plan that, if assented to and carried into effect, would constitute a fixing of prices in restraint of interstate trade and commerce, and the particulars of this plan were repeatedly communicated by defendant to the many wholesalers and jobbers with whom it had relations, and if the great majority of them not only did not express dissent from the plan but actually cooperated in carrying it out by themselves adhering to its details; the jury reasonably might infer that they did mutually give assent to the plan, equivalent to an agreement or combination to pursue it. In short, that upon finding many persons, actuated by a common motive, exchanging communications between themselves respecting a plan of conduct and acting in concert in precise accordance with the plan, the jury might find that they had agreed or combined to act as in fact they did act; that their simultaneous pursuit of an identical programme was not a miraculous coincidence, but was the result of an agreement or combination to act together for a common end.

The opinion states no ground upon which the instruction is held to be erroneous; the elaborate brief submitted in behalf of the Packing Company specifies no criticism upon it; and I am unable to discern adequate reason for condemning it. It suggested a perfectly natural and legitimate inference that might be drawn by the jury from the facts in evidence; having included in the recital the very same facts and circumstances) indeed, upon which this court now unanimously holds that the case was for the jury. Concerted action is of the essence of a conspiracy {Pettibone v. United States, 148 U. S. 197, 203); and it is ‘‘hornbook law” that where concerted action is found to exist following an interchange of communication between the actors, it gives ground for a reasonable inference of an agreement to act in concert. Just as the mechanism of a watch affords evidence of a design, and p. 218hence of a designer; so a systematic course of action, pursued at one and the same time by many persons and affecting their mutual interests, raises a fair inference of an agreement between them to pursue that course of action. Juries in conspiracy cases are instructed to this effect every day, without disapproval; and it seems to me the permitted inference is in accord with common sense and the ordinary rules by which men’s motives and secret understandings are judged from their acts.

The circumstances from which the trial judge permitted an inference of conspiracy to be drawn seem to me stronger p. 219than those held sufficient by this court in Thomsen v. Cayser, 243 U. S. 66, 84, where there was no direct proof of the terms of any conference or agreement participated in by the defendants, and the principal evidence consisted of circulars issued and a concerted course of dealing under which certain steamship owners operated their vessels in the trade from New York to South African ports without competing with one another; upon the strength of which the court rejected the suggestion that the circulars and the concerted course of dealing under them were accidental and without premeditation followed by unity in execution. So in Eastern States Retail Lumber Dealers’ Association v. United States, 234 U. S. 600, 607-609, 612, there was no express agreement among the retailers to refrain from dealing with the listed wholesalers, nor any penalty for faffing to do so. But the court found, in the systematic and periodical circulation of certain confidential information, commonly called black-fists, intended to guide the action of the recipients and cause them to withhold patronage from the listed concerns, sufficient evidence of a conspiracy in restraint of trade; saying, p. 612: “It is said that in order to show a combination or conspiracy within the Sherman Act some agreement must be shown under which the concerted action is taken. It is elementary, however, that conspiracies are seldom capable of proof by direct testimony and may be inferred from the things actually done, and when in this case by concerted action the names of wholesalers who were reported as having made sales to consumers were periodically reported to the other members of the associations, the conspiracy to accomplish that which was the natural consequence of such action may be readily inferred.” Here the character of the communications was different; but as evidence, when taken in connection with the concerted action that followed, they have the same tendency to show a conspiracy.

The first of these suits was brought by the Controller of Nevada to collect a transfer tax alleged to be due under a statute of Nevada approved on March 26, 1913, to take effect thirty days from that date. Nevada Stats, of 1913, c. 266, p. 411. The second suit was brought to quiet title to the shares of stock in respect of which the tax was assessed—to establish that there was no lien upon or claim against them for the tax. The two cases were p. 224heard together in the state courts and here upon the same facts. The Supreme Court of Nevada held that the tax was due and decided in favor of the State. The parties on the other side had set up and claimed immunity under the Constitution of the United States, especially the Fourteenth Amendment, and brought the cases here by writ of error. By way of caution they also filed a petition for certiorari which has not yet been passed upon by this Court.

This is a bill to restrain the collection of a franchise tax imposed by the statutes of Missouri upon domestic corporations. Laws of 1917, pp. 237-242.1 The plaintiff, a corporation of Missouri, filed with the State Tax Com- p. 229ST. LOUIS-SAN FRANCISCO RY. v. MIDDLEKAMP. 229

The objection most insisted upon in this Court was that the statute made no provision for a hearing, and that although the plaintiff applied to the Tax Commission for a hearing and had one, the statute was bad because it did not provide one in terms. Central of Georgia Ry. Co. v. Wright, 207 U. S. 127, 138. The mode of collecting the tax is by a suit where, of course, the present plaintiff would be heard, but it is said that the judgment of the Commission can be attacked only for want of jurisdiction and fraud. We cannot suppose however that any question of law apparent on the face of the record would not be open. The constitutional objection mainly relied upon necessarily would be. And as in this case the Commission accepted the plaintiff’s figures and the contest is wholly upon matters of law, we see nothing of which p. 230the plaintiff can complain in this respect. There is to be sure one charge involving matter of fact dehors the record. It is alleged that the plaintiff was taxed disproportionately as compared with other railroads. But the plaintiff was taxed upon its own figures in accordance with the statute and could not complain of that. If it had made out a case of fraud against the Commission we presume that the State Courts would have been open to it, as well as the District Court of the United States. But nothing of that kind was proved. Sunday Lake Iron Co. v. Wakefield, 247 U. S. 350, 353.

The next objection to the tax has assumed greater importance than any other because it induced the same judges who sat in this case to change their opinion and issue a temporary injunction in a suit like this brought by the Southwestern Bell Telephone Company. We will consider it although it hardly is open on the bill. It now has been decided by the Supreme Court of Missouri that corporations with stock having no stated par value can be admitted to do business in the State, State ex rel. Standard Tank Car Co. v. Sullivan, 282 Missouri, 261, and that decision was taken to mean that all such corporations fall within a provision imposing a tax of only twenty-five dollars upon foreign corporations without a capital stock. On that ground it was held that the Southwestern Bell Telephone Company was denied the equal protection of the laws. We hesitate to differ from judges presumably familiar with local conditions, but we cannot read the careful discussion by the Missouri Court as having the meaning supposed. It is true that it adverts to the “lump annual tax ” imposed upon foreign corporations without a capital stock while arguing that the policy and laws of Missouri do not forbid their entering the State. But at a later page it quotes with approval a Kansas case to show not only that the absence of a stated value for the stock would create no difficulty p. 231ST. LOUIS-SAN FRANCISCO RY. v. MIDDLBKAMP. 231