Eastman Kodak Co. v. Blackmore

277 F. 694 | 2d Cir. | 1921

MAYER, Circuit Judge

(after stating the facts as above). From the foregoing outline it is apparent that during the period of 1908 to June, 1913, plaintiff acquiesced and actively participated in defendant’s so-called restrictive sales system. After June, 1913, the system was abandoned, and therefore from that date until July, 1914, plaintiff was not under restrictions and could deal with defendant, on the one hand, in the free relation of customer with seller, and, on the other, with the public with the privilege and right of selling defendant’s goods at such prices as he pleased.

From 1899 until he was dropped by defendant: in 1902 plaintiff also acquiesced and actively participated in .defendant’s restrictive system. During this period he gaitied such advantages as accrued from the price-fixing system ánd from the exclusion of those dealers, who, unlike plaintiff, would not accede to this method of doing business.

The theory of plaintiff is that defendant wrongfully refused to sell goods to plaintiff during the period from 1902 to 1905; that the injury thus done was a continuing injury for which the plaintiff may now recover damages for the period from 1908 to 1914, for the reason that plaintiff never recuperated from the injury done to his business from 1902 to 1905, and that injury reflected itself in the'amount of business done by plaintiff from 1908 to 1914, and consequently in the diminution of net profits during that period.

.The trial judge held and plaintiff now urges that prior to the decisions in Dr. Miles Medical Co. v. Park & Sons Co., supra, and Bauer & Cie. v. O’Donnell, supra, defendant’s restrictive sales system was lawful. This was upon the theory that the Supreme Court had so held and had not held the practice unlawful until it handed down its opinions in the two cases just referred to.

[1] If this premise were to be adopted, it must necessarily follow that, if the business system now complained of was lawful in 1902, then defendant was entirely within its rights and acting lawfully when it. refused in 1902 to deal further with plaintiff. In other words, if in 1902 defendant had the right to refuse to sell goods or trade with a person who would not sign or otherwise participate in its “terms of sale” system, then obviously it could choose or exclude customers at will. Upon this theory we think it is plain that no damage can flow .from a lawful business or commercial transaction in which a person or corporation had a right to engage or from the refusal to sell to a person where such refusal was, as matter of law, wholly within the power and voluntary choice of the seller or dealer.

[2] If, on the other hand, it be assumed (and.we find it unnecessary to decide this point) that defendant’s restrictive system was at all times here concerned unlawful, then the question is whether a participant in an unlawful system of doing business can, as matter of law, Recover damages while at the same time participating in the unlawful system. As applied to the facts of this case, the question is whether plaintiff, as a participant after 1908, will be permitted to recover damages alleged to have been suffered during that period when during that very period for which he seeks redress he was an active wrongdoer, if defendant was a wrongdoer.

The rule is tersely stated by Gray, J., in Hall v. Corcoran, 107 Mass. 251, 253 (9 Am. Rep. 30) as follows:

“The general principle is undoubted that courts of justice will not assist a person who has participated in a transaction forbidden by statute to assert rights growing out of it, or -to relieve himself from the consequences of his ■own illegal act. Whether the form of the action is in contract or in tort, the test in each case is whether, when all the facts are disclosed, the action appears to be founded in a violation of law, in which the plaintiff has taken part.”

In Continental Wall Paper Co. v. Voight & Sons Co., 212 U. S. 227, 29 Sup. Ct. 280, 53 L. Ed. 486, plaintiff in an action at law sought to recover from defendant in a situation which may be regarded as the converse of that at bar.

“Stated shortly,” said Mr. Justice Harlan, “the present case is this:

“The plaintiff comes into court admitting that it is an illegal combination whose operations restrain and monopolize commerce and trade among the states and asks a judgment that will give effect, as Car as it goes, to agreements that constituted that combination, and by means of which the combination proposes to accomplish forbidden ends. We hold that such a judgment cannot be granted without departing from the statutory rule, long established in the jurisprudence of both this country and England, that a court will not lend its aid in any way to a party seeking to realize the fruits of an agreement that appears to be tainted with illegality, although the result of applying- that rule may sometimes be to shield one who has got something for which as between man and man he ought, perhaps, to pay, hut for which he is unwilling to pay.

“In such cases the aid of the court is denied, not for the benelit of the defendant, but because public policy demands that it should be denied without regard to the interests of individual parties. It is of no consequence that the present defendant company had knowledge of the alleged illegal combination and its plans or was directly or indirectly a party thereto. Its interest ■must be put out of view altogether when it is sought to have the assistance of file court in accomplishing ends forbidden by the law.”

In Bluefield S. S. Co. v. United Fruit Co., 243 Fed. 1, especially at pages 13 et seq. and 19, 155 C. C. A. 531, the court pointed out, in effect, that one who is in pari delicto in cases, such as that at bar, cannot recover, and the same principle is discussed in Victor Talking Mach. Co. v. Kemeny (C. C. A.) 271 Fed. 810, 816. See, also, McMullen v. Hoffman, 174 U S. 639, 654, 19 Sup. Ct. 839, 43 L. Ed. 1117, and Cooley on Torts (3d Ed. 1906) vol. 1, pp. 254 -261. Further citation is unnecessary because of the many cases cited in the cases referred to supra.

The proposition of plaintiff, in effect, is that, while he joined with defendant in the illegal method of doing business after 1908 and took such advantages as sprang therefrom, he may nevertheless recover damages caused, as he claims, during the period when he and defendant were both wrongdoers. With this proposition we are unable to agree.

[3, 4] As we have no power to dismiss the complaint, and a new trial must be ordered, in accordance with Slocum v. New York Life Ins. Co., 228 U. S. 364, 33 Sup. Ct. 523, 57 L. Ed. 879, Ann. Cas. 1914D, 1029, it may be well to call attention to another question presented upon this review. If plaintiff and defendant were engaged in an illegal restrictive system from 1899 to 1902, obviously that period cannot be set up as a standard with which to compare the profits of the period after 1908. It is necessary upon this point to refer merely to what was said in Victor Talking Machine Co. v. Kemeny, supra, at pages 818 and 819.

Tf, on the other hand, the business from 1899 to 1902 be deemed lawful, then the question of a standard of comparison does not arise, because, as above pointed out, upon that hypothesis, the refitsal of defendant to do business with plaintiff from 1902 to 1905 was lawful.

[5] There was no evidence of coercion in its legal acceptation, and thus the evideiace was complete that plaintiff was in paid delicto, if defendant’s business from 1899 to 1902 and from 1905 to June, 1913, be regarded as unlawful. From June, 1913, to July, 1914, there were concededly no restrictions upon plaintiff, and therefore defendant’s business so far as concerned plaintiff was lawful, but for that period plaintiff could not have recovered upon any theory that his net profits were decreased as the result of the suspension from 1902 to 1905 for the reason: First, that there is no standard of comparison; and, secondly, that, in any event, the damages would have been too remote and speculative. Central Coal & Coke Co. v. Hartman, 111 Fed. 96, 98, 99, 49 C. C. A. 244.

The views as to the law of coercion and participation in wrongful acts expressed supra were no different, in substance, than those stated by the learned trial judge, but the point of departure is illustrated by the following excerpt from his charge. After explaining, in effect, that defendant had not coerced plaintiff, in the legal sense of that term, and after .charging as to the legal effect of the voluntary participation of plaintiff in the restrictive sales system, the judge, as indicating the view entertained by him during the trial, continued:

“The law, as I say, is that so far as you may find that Mr. Blackmore consented to the terms of sale covering such of the articles as you may believe he did consent to, if any, then he cannot recover any damages by reason of any loss he may have suffered from the imposition of those terms of sale as to such articles.

“Now, of course, this, as I have said, does not apply to acts other than the terms of sale; for there is no contention that Mr. Blackmore consented to anything if he consented to anything at all except the terms of sale. If there were other acts that caused him injury than those represented by the terms of sale, then these matters that I have spoken of with reference to consent have no application to such matters, because his consent is limited to the system represented by the terms of sale, and, if he suffered damage from any acts of the defendant other than the terms of sale, the question of consent would have no application.”

The only “other acts” which need be considered are those which consisted in the acquisition by defendant of letters patent, secret processes, and stock control of other corporations carrying the exclusive right to make certain products. The record contains a long list of articles added from time to time to the “terms of sale” by virtue of these acquisitions. Certain photographic plates (Seed, standard, and dry plates) were not included in the regular terms of sale, but some of them, appear on a discount sheet dated April 1, 1906, which set forth certain restrictions as to price. The plaintiff, however, accepted discounts on these plates under the terms mentioned in the discount sheet.

In brief, assuming that what defendant did in conjunction with others amounted to a conspiracy under the act, and that defendant succeeded in obtaining a monopoly contrary to the act, plaintiff at all times derived the advantages and accepted the benefits which flowed from that conspiracy and that monopoly.

[6] It is fundamental that in the same conspiracy all participants are conspirators, whether the part they play be great or small. They cannot receive some of the fruits and then be held blameless for other acts which they may not have initiated but whose benefits they have received. On the evidence in this case, we are unable to find any act of defendant or of plaintiff which, as matter of law, separates them from each other as participants in the same conspiracy and which frees plaintiff from being in pari delicto with defendant.

We aré of opinion, therefore, that the court should have dismissed the complaint in response to motions duly made.

Judgment reversed.