213 S.W.2d 133 | Tex. App. | 1948
Appellants brought this suit to enjoin appellee from alleged violations of the State Anti-Trust Laws in conducting its butane gas business in Texas; contending that their several businesses (butane dealers) were being injured by defendant's unfair and illegal method of competition. Plaintiffs do not pray for the recovery of damages or relief claimed as peculiarly applicable to them; a general enforcement of the laws against trusts and monopolies being sought in their bill of particulars.
The question here simply involves the sufficiency of pleading to state a cause of action, with three different pretrial hearings as background thereto. On each hearing, material allegations of the petition were stricken upon special exceptions with the result of amended pleading; and plaintiffs declining to amend the third amended original petition after similar court rulings, there was an order of dismissal, with timely appeal.
Appellants' points of error relate entirely to the court's action in sustaining exceptions One to Nineteen inclusive, necessitating, first, a summary of said trial petition, viz:
Petitioners are engaged in the business of supplying butane to homeowners, schools, gins and others using gas as a fuel, operating under trade names of Automatic Gas Company, Dallas Butane Gas Company, Allen Butane Gas Equipment Company, Pittsburgh Water Heater Sales Company, K. G. Butane Gas Equipment Company, Eveready Butane Gas Company and Consumers Butane Gas Company, residing and carrying on their several businesses in the Texas counties of Dallas, Madison, Tarrant, McLennan and surrounding trade territory; that defendant is a public utility corporation, organized and doing business under provisions of ch. 15, Title 32, Rev.Civ.Sts., Vernon's Ann.Civ.St. art.
They allege that the ceiling price of butane delivered into tanks of consumers has been fixed at 10 cents per gallon, *135 plaintiffs having always sold said gas at various prices within the maximum estabblished by Federal regulations; defendant, however, after entering into active retail competition, and for purpose of attracting customers away from plaintiffs, has agreed to sell and does sell butane at six cents per gallon; and with intent to injure plaintiffs, continues to sell gas at such lower price; naming thirteen Dallas County individuals, former customers of one of the plaintiffs on basis of eight cents per gallon, who had been solicited by defendant through its agents and employees, with resulting contracts of sale and delivery of gas to them at six cents per gallon.
A conspiracy on part of defendant's officers, agents and employees to restrain trade and competition in violation of art. 1640, Penal Code, is then charged; the conspiracy being between defendant corporation and its said officers, agents, etc., acting within the scope of their employment1 to enter into competition with those already selling butane at retail and underselling them by charging six cents per gallon; said officers and employees agreeing to take advantage of defendant's position as principal manufacturer and producer of butane in Texas and open offices in the various communities of the State for handling of retail sales; ceasing to sell gas as theretofore in wholesale quanities and thus to monopolize the retail field; further, as part of the conspiracy, making contracts with ultimate consumers whereby, in consideration of aforesaid reduced price of gas, each consumer has bound himself to purchase all his butane requirements from defendant. Attached to the petition as "Exhibit A" is the contract in question which it is alleged the thirteen Dallas County individuals have separately executed along with numerous unknown persons, former customers and otherwise. Plaintiffs further charge that thousands of such written contracts have been signed between defendant and consumers throughout Texas, each purchaser being therein bound to buy butane only from defendant during existence of such contract; and if "Exhibit A" as a single contract be not obnoxious to the State Anti-Trust Laws, nevertheless the existence of many such contracts constitutes a conspiracy, restraint of trade and an illegal means of competition; further, that the inevitable result of such series of contracts is to establish a monopoly in the retail sale of butane, because they are exclusive in nature; and whether exclusive or not, actually have that effect in that the customer signing same believes that he is obligated to take his full requirements from the defendant and does actually deal exclusively with defendant under the belief that he is so bound; that plaintiffs have no adequate remedy at law; their customers are being wheedled away by such illegal devices and their several businesses are being destroyed; that the resulting injury is not compensable in money because the damage is impossible of ascertainment; praying that defendant be perpetually enjoined from (1) engaging in the practices herein complained of; (2) from making exclusive contracts with customers in writing; (3) from creating a monopoly in the sale of butane at retail in Texas, particularly in the areas where plaintiffs reside; and (4) from negotiating any future contracts in violation of State Anti-Trust Laws, or for such lesser relief as the facts may warrant.
It is unnecessary to quote the contract (Exhibit A) in full. Such writing identifies the parties as "Seller," and "Buyer," allegedly covering a two-year period and "thereafter until terminated by either party on ten (10) days written notice * * *." In the second paragraph it provides: "Subject to and in accordance with the terms, conditions and covenants hereinafter contained, Seller agrees to sell and deliver to Buyer, and Buyer agrees to receive and purchase from Seller, all of Buyer's butane requirements for use in Buyer's underground butane system, hereinafter called `system', and consisting primarily of a tank suitable to receive butane and a gauge to register the contents in said tank, located at (a specified place)." Also, under *136 "Discontinuance of Deliveries and/or Cancellation," it recites "Seller may discontinue deliveries of butane and/or cancel this contract on account of any of the following reasons: For failure by Buyer to purchase all of Buyer's said butane requirements from Seller * * *." The instrument is called a "Butane Sales Contract," containing detailed provisions under various headings such as "Delivery," "Measurements," "Monthly Bills," "Price," etc.
The provisions of art. 1640, P.C. (invoked by appellant) impose criminal liability upon corporate agents, employees, stockholders or officers who participate in the formation of a trust, monopoly or conspiracy in restraint of trade as these terms are defined in previous articles, both civil and penal (1632, 1633, 1634, P.C., Vernon's Ann.P.C. arts. 1632-1634, 1640, 7426, 7427, 7428, R.S. Vernon's Ann.Civ.St. arts. 7426-7428. In this connection and in final analysis, the allegations of petitioners simply charge that appellee corporation and its officers, agents and employees have formed a trust (art. 7426), a monopoly (art. 7427) and a conspiracy in restraint of trade (art. 7428), in that the corporation and its agents, officers and employees, while acting within the scope of their employment have combined and conspired to injure appellants as competitors in the following respects: (1) by discontinuing its wholesale butane business and entering the retail butane business in competition with appellants and others; (2) by offering to appellants' customers and prospective customers butane at a price below that at which appellants sell or offer to sell it; (3) by entering into contracts with consumers, on the form attached to appellants' petition as Exhibit A, which have the effect of restraining competition and monopolizing the retail butane business. A reading of the cited statutes under their well settled interpretation readily demonstrates, we think, the insufficiency of the petition in question to state a cause of action.
(1) A trust or monopoly is not alleged. Arts. 7426, R.S. and 1632, P.C. are identical; defining a "trust" as a "combination of capital, skill or acts by two or more persons, firms, corporations or associations of persons, or either two or more of them for * * *" the seven enumerated purposes; and a combination is essential to the formation of a "trust." Our Supreme Court from early times has ruled that a statutory combination cannot exist unless the two or more persons are independent and capable of acting in competition with one another; holding in Welch v. Phelps
Bigelow Windmill Co.,
(3) The principal ground of attack, however, is upon the quoted provisions of the agreement between gas company and customer asserting an illegal restraint of trade (art. 7428, R.S. and 1634, P.C.); but the inapplicability of these statutes to the pleaded contract is implicit in appellants' own brief, citing (as they do) Cox, Inc., v. Humble Oil
Refining Co., Tex.Com.App.,
In the City of Crosbyton v. Texas-New Mexico Utilities Co., Tex. Civ. App.
Furthermore and as appellee points out, the type of contract here calls for the rendition of a service; obligating the seller to maintain the supply of butane in buyer's system at not less than 10 percent of its capacity and providing for payment according to monthly consumption as shown by the tank gauge or meter readings to be made by the buyer and mailed to seller. If appellee is to render this continuity of service, obviously there must be some definiteness and exclusiveness attached to the rights and obligations of the parties; the exclusive feature of the instant arrangement being but ancillary and necessary if the contracted service is to be performed.
Also strongly relied upon by appellants is Fairbanks, Morse Co. v. Texas Electric Service Co., 5 Cir.,
But appellant pleads "that if said contracts singly are not themselves in violation of the law, said series of hundreds and thousands of such contracts so made by the defendant have the necessary and natural tendency to monopolize the field for the sale of butane gas at retail * * *"; again citing the Federal case of Fairbanks, Morse Co. v. Texas Electric Service Co. in support, with particular reference to the holding of Judge Hutcheson that a system of contracts creates a monopoly, where one or a few of the same exclusiveness might not have such effect. A complete answer to the contention just made will be found, we believe, in appellee's counter point 4: "Since the type of contract in question is not unlawful when made with one consumer, it is not unlawful when made with many consumers. If one consumer can lawfully contract for his requirements of butane at a particular location, and for a particular system, then other consumers can do likewise. The multiplication of a lawful contract does not make the result unlawful." In applying our Anti-Trust Laws, Texas courts do not look to the number of contracts involved but rather to the restraint imposed, whether general or limited. For instance, in Twaddell v. H. O. Wooten Grocer Co., supra, the contract was not condemned because it was one of a system, but sustained because it operated as a limited and not a general restraint upon each contracting member of the Red White Stores System. In short, and as logically stated by appellee, the validity of the particular restraint must be determined upon basis of each individual contract; "otherwise the court must undertake the insuperable task of judging in each individual case how many such contracts can be made and of drawing a line based upon numbers of ratios or percentages between competitors."
It should here be noted that in the brief of appellants is the argument of unfair competition in that the defendant is falsely representing its ability to supply requirements of butane for purpose of alienating plaintiffs' customers and inducing them to enter into these restrictive contracts; also charging sales of butane by defendant at less than cost of manufacture or production in violation of art. 1638, P.C.; their trial petition, however, containing no such allegations.
Lastly and in final analysis, the claim of unfair competition is based on sales by defendant of butane at a price less than appellants are able or willing to sell it to their customers. Legitimate price-cutting is of the essence of a free competition; being an all too infrequent phase of present day economics, under which commodity prices appear to have no direction except "up." "* * * One having business interests to serve may by every fair means, such as lowering prices, offering better service, showing better salesmanship, freely induce those not under fixed contract to become his customers. * * *" Fairbanks, Morse Co., v. Texas Electric Service Co., supra. "If, for instance, the appellees, in the transaction of the business of lending in competition with appellants, had offered money for loan at a rate below that which the appellants could furnish it, and thereby induced the customers of the appellants to borrow from the defendant company, and by reason thereof Brown Bros. were unable to maintain their business, and were broken up and compelled to quit, then no cause of action would exist in favor of the appellants against the defendants, because, however malicious the motive, the means used would be lawful. * * *" Brown v. American Freehold Land Mortgage Co., etc.,
The trial court's judgment must be in all respects affirmed.