47 Ind. App. 298 | Ind. Ct. App. | 1911
— Appellee, a corporation, brought this action against appellant, also a corporation, to recover for goods sold to and appropriated by appellant. The complaint is in two paragraphs. The first paragraph is based on an order and confirmation in writing, setting out the terms of the contract of sale. The original order called for 180 barrels of glucose, 120 barrels of which were shipped and paid for according to contract, and this action is to recover for the remaining sixty barrels shipped pursuant to said order on January 8, 1908.
Appellant answered in four paragraphs. The first admits the purchase of the goods as averred in the complaint, but alleges that on November 14, 1906, the Glucose Sugar Refining Company submitted to appellant a proposition in writing (setting it out), wherein it was announced that if appellant and its successors would continue to buy, from said company or its successors, all the glucose and grape sugar required for its establishment during the remainder of the year 1906 and the entire year of 1907 the Glucose Sugar Refining Company would pay an amount equal to ten cents per hundred pounds on all shipments of said products “which shall have been made by this company from July 1, 1906, to December 31, 1906, and paid for by you.”
It is further averred that appellant accepted said proposition and conformed thereto in all its dealings with said Glucose Sugar Refining Company; that afterwards said company sold its entire business to appellee; that appellant continued to purchase from appellee all the glucose and grape sugar required by it in its business; that thereafter on December 24, 1907, appellee confirmed the proposition offered by its predecessor and extended it for another year under the same terms, except that the number of cents “per hundred pounds” was left blank; that on January 23, 1908, appellant was informed by appellee that the amount to be paid would be “fifteen cents per hundred pounds” on the goods named; that all of the glucose and grape sugar purchased by appellant was purchased from appellee, under the contract, and constituted its acceptance of the proposition; that during the year 1907 appellant purchased from appellee,, under and pursuant to said con
The second paragraph of amended answer alleges that appellee is a combination and conspiracy in restraint of trade and commerce between the states, being an organization formed to monopolize and control the manufacture, sale and trade in glucose and grape sugar within the United States, and is an illegal organization operating in violation of law; that appellee sold to appellant the goods sued for at an exorbitant price, the latter being compelled to buy from appellee; that appellant is a large consumer of such goods, and at the time of the purchase of the goods could not do otherwise than to make trade arrangements with appellee, setting out propositions as in the first paragraph; that the contract formed by said propositions and their acceptance is unlawful and in restraint of trade, and all the goods sued for in this action were purchased under and pursuant thereto, and not otherwise.
The third paragraph of said answer alleges that appellee is a trust, a combination and conspiracy, organized to monopolize the manufacture and sale of, and trade in, glucose and grape sugar in the United States, in violation of the laws of the State of Indiana and of the United States, and has no legal capacity to sue.
The fourth paragraph of answer alleges that appellee is an unlawful combination of the Glucose Sugar Refining Company and a number of other firms and corporations, naming them, which, before the formation of appellee trust, were independent and competing manufacturing concerns, manufacturing the goods sued for in the complaint; that the times, places and steps of the organization and combination of said independent companies into appellee corpora
With said paragraph of answer are filed a number of interrogatories, the purpose and object being to trace the formation of appellee company back to constituent companies, operated independently.
The court sustained the motion to strike out the interrogatories, and also sustained the demurrers to each paragraph of answer, to which appellant excepted; and, refusing to plead further, the court rendered judgment in favor of appellee.
These rulings are separately assigned as error and are relied upon for reversal.
In this case the brief of appellee has supplied that 'part of the record omitted from the brief of appellant, so that the omissions, will be disregarded, and the questions raised will be considered. Roberts v. Fort Wayne Gas Co. (1907), 40 Ind. App. 528; Chicago, etc., R. Co. v. Wysor Land Co. (1904), 163 Ind. 288; Tipton Light, etc., Co. v. Dean (1905), 164 Ind. 533; Chicago, etc., R. Co. v. Walton (1905), 165 Ind. 642.
The infirmity of this contention lies in the fact that the condition represents the consideration for the promise, and, if the condition is illegal, the promise supported by it also fails.
It is averred that appellant continued to purchase from plaintiff all of the glucose and grape sugar required in the conduct of its business until the time of the bringing of this action, which is shown to have been in March, 1908. As the terms of the proposition required appellant to continue to purchase during the entire year 1908, it affirmatively appears that no right to recover the rebate is shown in this" answer.
The case of United States v. Greenhut (1892), 51 Fed. 213, was for habeas corpus on behalf of a prisoner indicted for violation of the Sherman anti-trust act, the charge being that defendants, in pursuance of a combination to restrain trade, sold their product to dealers under an agreement wherein the dealers were promised a rebate under conditions similar to those set out in the answer in this case. The conditions in that case, however, required the purchasers not only to buy from the trust, but also fixed the price at which the goods must be sold by them. The indictment was held to charge no crime, in that no contract is shown. The court said: “During that period they bought such products only from certain named dealers in a limited number of states, and sold only at prices fixed by the defendants; but they did so only because they chose to, —because the offer of a rebate to purchasers who would thus conduct their business was inducement operating upon their self-interest. No obligation of any kind constrained them so to do; during that entire period, certainly, no contract restrained them, for there was no contract in existence. They were entirely free to buy from whom they pleased and to sell at any price they chose. The statute does not prohibit the offering of special inducements to such pur
The second paragraph o£ answer alleges that appellee is a combination and conspiracy in restraint of trade and commerce between the states, formed to monopolize and control the manufacture and sale of glucose and grape sugar; that the contract for the sale of the goods in suit is void, and therefore no liability arose thereon.
The third paragraph characterizes appellee, as in the second, and alleges that the conspiracy was to monopolize the trade in its product in violation of the anti-trust laws of the United States and the State of Indiana, and that it has no legal capacity to sue. The fourth paragraph is substantially the same as the third, except that the names of the constituent companies are set out.
Appellant has invoked the common law, the anti-trust law of Indiana, and the federal act of July 2, 1890, known as the Sherman law, in support of the illegality of the contract and sale forming the basis of this action. For the purposes of this opinion it may be assumed that appellee is a trust and combination in restraint of trade, existing in violation of the common law, and of the federal and state laws. The answers under consideration do not dispute the indebtedness shown by the complaint, or that it is justly due and unpaid, but, as a defense, say that appellee is a trust and combination in restraint of trade, and by reason thereof appellant is relieved from the payment of a debt which would otherwise be collectible.
The duty of enforcing the anti-trust laws of the State of Indiana is enjoined upon the Attorney-General and the prosecuting attorneys. There is no provision in the antitrust acts of this State which authorizes a defense such as that interposed by appellant in this case. Nor has there been any construction of these anti-trust acts by the Supreme Court or this court. We must therefore look to the decisions of other states and the decisions of the federal courts.
In the case of LaFayette Bridge Co. v. City of Streator (1900), 105 Fed. 729, the court said: “The defendant is, in this suit, attempting to avail itself in a collateral proceeding of a defense based on a fact which should be determined in a direct proceeding. In other words, before a defendant can evade the payment of the purchase price of commodities, actually received, on the ground that the seller is a trust or combination in restraint of trade, in contravention of the statute, there should be an adjudication of a competent tribunal, in a direct action instituted for that purpose, determining that such seller is a trust or combination in the sense contemplated by the statute.”
The rule to be applied in determining the independent character of an obligation held by an unlawful combination is stated with clearness in the case of In re The Charles
In the leading case of Connolly v. Union Sewer Pipe Co., supra, the questions arising on this appeal were considered at length, the opinion of the court being delivered by Mr. Justice Harlan. The holding is that a defense of the character here interposed is not good under either the common law or the Sherman anti-trust law. And for the same reasons we may add that the defense is not good under
Referring to the facts in the case of Connolly v. Union Sewer Pipe Co., supra, at page 551 the court said: “The buyer could not refuse to comply with his contract of purchase upon the ground that the seller was an illegal combination which might be restrained or suppressed in the mode prescribed by the act of congress; for congress did not declare that a combination illegally formed under the act of 1890 should not, in the conduct of its business, become the owner of the property which it might .sell to whomsoever wished to buy it. So that there is no necessary legal connection here between the sale of pipe to the defendants by the plaintiff corporation and the alleged arangement made by it with other corporations, companies and firms. The contracts under which the pipe in question was sold were, as already said, collateral to the arrangement for the combination referred to, and this is not an action to enforce the terms of such arrangement. That combination may have been illegal, and yet the sale to the defendants was valid.” Again in the same case the court said: “If the act of congress .expressly authorized one who purchased property from a combination organized in violation of its provisions, to plead, in defense of a suit for the price, the illegal character of the combination, that would present an entirely different question. But the act contains no such provision. ’ ’
In the case of National Distilling Co. v. Cream City Importing
The supreme court of Michigan in the case of International Harvester Co. v. Eaton (1910), 127 N. W. (Mich.) 695, followed the principle declared in the foregoing cases The court said: “Assuming, as contended, that the alleged combination was illegal if tested by the principles of the common law, still it would not follow that the defendant could refuse to pay for goods bought by him under special contract with plaintiff. The illegality of such combination and ‘trust’ would not prevent the plaintiff corporation from selling goods that it obtained even from its constituent companies or either of them. It could pass title by sale to any one desiring to buy, and the buyer could not justify a refusal to pay for what he bought and received by proving that the seller had previously, in the prosecution of its business, entered into an illegal combination with others in reference generally to the sale of articles or products.”
In the State of Illinois, section six of the anti-trust act provides that the purchaser of goods from an unlawful combination shall not be liable for the price of the goods so purchased, and may plead the act as a defense to any action to recover such price. It was held, however, in the case of Chicago Wall Paper Mills v. General Paper Co. (1906), 147 Fed. 491, 78 C. C. A. 607, that the Illinois statute can have no extraterritorial effect, and where the selling combination was not organized under the laws of the State of Illinois the statute cannot be pleaded as a defense. In that ease the general principle is announced that a sale of merchandise by a trust or monopoly, organized in violation of law, either state or federal, is not illegal where the sale is collateral and bears no direct relation to the unlawful combination.
The more recent case of Boatman’s Bank v. Fritzlen (1909), 175 Fed. 183, follows the principle declared in the ease of Connolly v. Union Sewer Pipe Co., supra, and the cases herein cited. Referring to the case of Continental Wall Paper Co. v. Louis Voight & Sons Co., supra, the court said: “The plaintiff was a combination formed and existing in violation of the federal anti-trust act. Defendant was a member of the unlawful combination. The contract in that case was declared unlawful and nonenforceable because brought by the unlawful combination itself against a member thereof on a contract growing out of and connected with the unlawful association of the defendant with the plaintiff.” The distinction is clear when measured by the test herein announced. In the case of Continental Wall Paper Co. v. Louis Voight & Sons Co., supra, plaintiff could not open its case without showing that it had broken the law, and that it was relying upon an illegal transaction with defendant as constituting its right to recover. In the case at bar there is no intimation that appellant was a part of the unlawful combination, or that the purchase of the goods in suit was made in furtherance of an unlawful purpose. Whether considered as interstate commerce or as governed by the laws of Indiana, the transaction forming the basis of this suit is independent of any illegal design, and, in the absence of an express statute authorizing a defense such as here interposed, it cannot, in reason or upon authority, be held good. There was no error in sustaining the demurrers to the answers, and it follows that there was no error in sustaining the motion to strike out the interrogatories.
The judgment is affirmed.