157 Wis. 604 | Wis. | 1914
The defendant contends that the contracts sued on are void under the federal Anti-Trust Act, 26 U. S. Stats, at Large, 209, ch. 647 (3 U. S. Comp. Stats. 1901, p. 3200), which is as follows:
“Sec. 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such combination or conspiracy, shall, be deemed guilty of a misdemeanor, and, on*614 conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court
“Sec. 2. Every person who shall monopolize, or -attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.”
Further, that such contracts were made in violation of secs. 1791/ and 1747e, Stats, of Wis., which statutes read as follows:
“Sec. 1791/. Any corporation organized under the laws of this state which shall enter into any combination, conspiracy, trust, pool, agreement or contract intended to restrain or prevent competition in the supply or price of any article or commodity in general use in this state, or constituting a subject of trade or commerce therein, or which shall in any manner control the price of any such article or commodity, fix the price thereof, limit or fix the amount or quantity thereof to be manufactured, mined, produced or sold in this state, or fix any standard or figure by which its price to the public shall be in any manner controlled or established, shall, upon proof thereof, in any court of competent jurisdiction, have its charter or authority to do business in this state canceled and annulled. Every corporation shall upon filing its annual report with the secretary of state, make and attach thereto the affidavit of its president, secretary or general managing officer, fully stating the facts in regard to the matters specified in this section.”
“Sec. I747e. Every contract or combination in the nature of a trust or conspiracy in restraint of trade or commerce is hereby declared illegal. Every person who shall combine or conspire with any other person to monopolize or attempt to monopolize any part of the trade or commerce in this state shall forfeit for each such offense not less than fifty dollars nor more than three thousand dollars. Any such person shall*615 also be liable to any person transacting or doing business in tbis state for all damages be may sustain by reason of tbe doing of anything forbidden by tbis section.”
Tbe circuit court beld tbat sec. 7 of tbe contracts by which tbe contracting consumers agreed not to purchase any pulp wood from any person, firm, or corporation except tbe plaintiff, unlawfully restrained trade, in tbat it took twelve consumers of wood out of tbe market and operated to tbe disadvantage of, those who bad pulp wood to sell by reducing tbe number of competing buyers.
Tbe principal contention made by respondent’s counsel in their brief and on tbe oral argument is tbat tbe contracts evidence a plan or scheme on tbe part of tbe contracting parties to control and restrict tbe output of pulp and paper, to tbe end tbat tbe market might be manipulated and prices raised, and tbat such purpose is made manifest by tbe fact tbat twelve or thirteen large consumers of pulp wood have bartered away their rights from year to year for a series of years to supply their legitimate wants in tbe way of raw material. It is urged tbat the plaintiff is a spurious creature, organized for ulterior purposes and to evade tbe law, and tbat tbe real power behind it is a group of manufacturers intent on unduly stimulating competition or suppressing it altogether, as may best suit their lawless wishes, and tbat tbe inevitable tendency of tbe contracts is towards monopoly and unlawful restraint of trade.
Tbe complaint shows that tbe wood supply furnished to tbe plaintiff came from tbe states of .Wisconsin, Minnesota and Michigan, and tbe Dominion of Canada. Tbe contract we think involved interstate commerce, and if so the federal statute is applicable and tbe case will be treated on tbat basis. U. S. v. Reading Co. 226 U. S. 324, 33 Sup. Ct. 90; Swift & Co. v. U. S. 196 U. S. 375, 25 Sup. Ct. 276; U. S. v. Patten, 226 U. S. 525, 33 Sup. Ct. 141; Continental W. P. Co. v. Louis Voight & Sons Co. 212 U. S. 227, 29 Sup. Ct. 280.
The case will first be considered on the aspect principally relied on by respondent’s counsel and in reference to the so-called Sherman Anti-Trust Law.
The questionable features of the contracts arise out of the fact that they take in twelve or thirteen large consumers of wood and that these consumers have appointed an agent who has the exclusive authority to buy all their pulp wood.
We do not construe the contracts as fixing a price which the plaintiff was to pay for wood. The prices specified in the sixth paragraph are merely an estimate, made in advance, of what the commodity would probably cost, and payment was to be made on the basis of this estimate as the wood was delivered. When the total expense for the year was ascertained, the purchasers were to settle on the basis of the actual cost, which included seven per cent, interest on the capital employed by the plaintiff. If the estimated price was greater than the actual cost the excess was to be refunded by the plaintiff. If the actual exceeded the estimated cost the purchasers were required to make up the deficiency and pay in proportion to the amount of wood purchased. This we deem to be the clear intent and meaning of paragraph 10 of the contract and of the provisions of the same taken as a whole. No other contract could be made if the actual purpose was to secure a supply of wood. The contracts covered future deliveries for a period of a year. Many conditions might arise which would materially affect the supply of wood. A good winter for hauling would tend toward a large supply and a lower price, while an open winter would greatly curtail output and tend to increase the price. The varying conditions of the wood market are reflected in the estimated prices found in the contracts. The estimated price of spruce was $2 per cord higher for 1907 than for 1905, and of hemlock $1.50 per cord higher. The plaintiff would have to pay the going
The complaint being challenged by demurrer, every reasonable intendment must be made in favor of the pleading. Downer v. Tubbs, 152 Wis. 177, 179, 139 N. W. 820; Jones v. Monson, 137 Wis. 478, 119 N. W. 179.
“In law every intendment that harmonizes with honesty and fair dealing must be presumed in the light of the alleged facts.” Forest Co. v. Shaw, 150 Wis. 294, 304, 136 N. W. 642.
Where a contract is fairly open to two constructions, by one of which it would be lawful and the other unlawful, the former must be adopted. Hobbs v. McLean, 117 U. S. 567, 576, 6 Sup. Ct. 870; U. S. v. Cent. Pac. R. Co. 118 U. S. 235, 6 Sup. Ct. 1038, cited in Watters v. McGuigan, 72 Wis. 155, 157, 39 N. W. 382; Hicks P. Co. v. Wis. Cent. R. Co. 138 Wis. 584, 591, 120 N. W. 512.
“When the terms of a contract are indefinite, uncertain, and susceptible of two constructions, and by giving them one construction one of the parties would be subjected to a forfeiture, and by giving them the other no such forfeiture would be in-*618 cnrred and no injustice would be done to the other party, the contract should be so construed as not to create the forfeiture.” Jacobs v. Spalding, 71 Wis. 177, 190, 36 N. W. 608; Weidner v. Standard L. & A. Ins. Co. 130 Wis. 10, 19, 110 N. W. 246; Hicks P. Co. v. Wis. Cent. R. Co. 138 Wis. 584, 590, 591, 120 N. W. 512; Appleton Iron Co. v. British Am. Assur. Co. 46 Wis. 23, 1 N. W. 9, 50 N. W. 1100; Wier v. Simmons, 55 Wis. 637, 13 N. W. 873.
A violation of the federal Anti-Trust Act is made a misdemeanor which is punishable by a fine not exceeding $5,000, or by imprisonment not exceeding one year, or by both, in the discretion of the court.
“It is a most fundamental canon of criminal legislation that a law which takes away a man’s property or liberty as a penalty for an offense must so clearly define the acts upon which the penalty is denounced that no ordinary person can fail to understand his duty and the departure therefrom which the law attempts to make criminal.” Brown v. State, 137 Wis. 543, 119 N. W. 338.
It is substantially ruled in some of the federal courts that in close and doubtful cases arising under the Anti-Trust Law and involving intricate questions, the merits will not be passed upon on demurrer nor until all the essential facts are before the court, where such facts may materially aid in determining whether or not the law has been violated. U. S. v. Winslow, 195 Fed. 578, applying the equity rule as stated in Kansas v. Colorado, 185 U. S. 125, 144, 145, 22 Sup. Ct. 552. This rule of practice is not binding on this court, but does not differ essentially from our uniform holdings in later years as to when a complaint will be held bad on general demurrer.
There is not so much difficulty at the present time in determining what the law is as there is in making the proper application of established rules to the facts in each particular case. There has been a world of decisions on our antitrust laws, common and statute, in the state and federal
Whatever understanding or misunderstanding may have arisen out of the decisions in U. S. v. Trans-Missouri F. Asso. 166 U. S. 290, 17 Sup. Ct. 540, and U. S. v. Joint Traffic Asso. 171 U. S. 505, 19 Sup. Ct. 25, it is now definitely decided that the words “restraint of trade” at common law and in the law of this country at the time of the adoption of the Anti-Trust Act embraced only acts, contracts, agreements, or combinations which operated to the prejudice of the'public interests by unduly restricting competition or by unduly obstructing due course of trade, and that Congress intended that those words used in the act should have a like significance. Standard Oil Co. v. U. S., supra; U. S. v. American T. Co., supra. These decisions have been freely criticised and often denounced, but they are the law of the land. It is more than three years since they were announced, during which time Congress has been in almost continuous session. So far as we know there has not even been any attempt to pass a law de-
The real question before us for solution is: Do the contracts referred to, read in connection with the allegations of the complaint, show that they operated to the prejudice of the public interest by unduly restricting competition or by unduly obstructing the due course of trade?
The answer depends on the extent to which competition has been restricted or trade has been obstructed. This must be determined from the existing facts. When the facts are ascertained the question of whether the restraint is reasonable or otherwise is one of law. Richards v. American D. & S. Co. 87 Wis. 503, 513, 58 N. W. 787. Sometimes the essential facts may be so clearly shown by the contract involved, if one is involved, that further evidence is unnecessary to show that the restraint is unlawful. There is another class of cases where the contract in itself may present an innocent appearance, but when considered in the light of other facts and circumstances, including the purpose for which it was made, the objects sought to be accomplished and the results actually brought about, the contract may be positively vicious. In such cases the contract constitutes a link in the chain of evidence. There is a third class of cases where the contract involved shows some restriction of competition or some obstruction of trade, but does not show whether such restriction or obstruction is undue and unreasonable or otherwise. In such cases it is necessary to resort to evidence dehors the contract to ascertain whether it is void or valid.
The contracts involved in this case would seem to fall within the latter class. If they are reasonably susceptible of an interpretation which would render them lawful, it is the duty of the court to place that interpretation upon them. It is
Defendant asks us to assume altogether too much in passing upon these contracts and the averments of the complaint. This is not an action brought by or in behalf of the public to dissolve an unlawful combination. It is a case where ope particeps criminis is trying to avoid responsibility to his co-partners in crime, if any crime was in fact committed. In berating the plaintiff the defendant is also belaboring itself. It is true, it had no stock in the plaintiff corporation, but if the corporation was organized for an unlawful purpose, the defendant aided, abetted, and assisted it in the execution of such unlawful purpose. The contracts before us covered a period of six or seven years. If the production of pulp wood and of paper was restricted for the purpose of inflating the price of paper or depressing the price of wood, the defendant is as well aware of that fact as is any one else, and whether it is or not the matter is easily susceptible of proof. The de
Eor aught we know it may be shown on the trial that the contracting manufacturers made their estimates large enough to cover their needs without interference from any one; that the estimated amounts were substantially furnished, or that a good-faith attempt was made to supply them; that thd exercise of that reasonable diligence which plaintiff agreed to exercise was sufficient to insure a full supply of wood, or at least as much as the mill owners could secure if they were themselves engaged in the work of buying; that the mills affected had all the wood they needed at all times, and that there was no thought of restricting the output of paper or pulp and that there was no restriction in fact and no influence exerted on the paper market whatever by this alleged unlawful combine. It might even be made to appear that the only harm which the parties could do, if they attempted to reduce production, would be to themselves. It might also be made to appear that the plaintiff was organized to further legitimate economies in the cost of the article which the mill men had to offer the consuming public. Manifestly the question under consideration cannot be intelligently decided until the actual facts are before the court, because the complaint and contracts
There is nothing in itself unlawful in two or more persons appointing a common agent to purchase a commodity which they require and in giving such agent the exclusive right to do the buying. Nat. D. Co. v. Cream City I. Co. 80 Wis. 352, 56 N. W. 864; Kellogg v. Larkin, 3 Pin. 123; Wheeler-Stenzel Co. v. American W. G. Co. 202 Mass. 471, 476, 89 N. E. 28; Burley T. Soc. v. Gillaspy (Ind.) 100 N. E. 89; Reeves v. Decorah F. C. Soc. (Iowa) 140 N. W. 844; First Nat. Bank v. Missouri G. Co. 169 Mo. App. 374, 152 S. W. 378; Central S. R. Co. v. Cushman, 143 Mass. 353, 9 N. E. 629; Nexo York T. R. Co. v. Brown, 61 N. J. Law, 536, 43 Atl. 100; Arkansas B. Co. v. Dunn, 173 Fed. 899; Anderson v. U. S. 171 U. S. 604, 613, 614, 19 Sup. Ct. 50; Connolly v. Union SA P. Co. 184 U. S. 540, 22 Sup. Ct. 431, read in connection with additional facts stated in dissenting opinion of Justice Holmes in Continental W. P. Co. v. Louis Voight & Sons Co. 212 U. S. 227, 29 Sup. Ct. 280. We do not wish to be understood as approving all that is said in those cases.
Such an arrangement becomes unlawful when it injuriously affects the public, or, in other words, when it unduly restricts competition or restrains trade. Ordinarily the invalidity of such an agreement must be made to appear from facts outside of the contract, because, the writing seldom shows the facts necessary to determine whether the restraint is reasonable and permissible or undue and criminal. The circuit
The complaint shows that the mills for which plaintiff acted as agent used about twelve per cent, of the entire output of wood in the territory in which it made its purchases. It cannot be held as a conclusion of law on these facts that there was an undue restraint of competition. The producers of wood have made no complaint on this score. There may have been an abundance of buyers to insure fair and free competition in bidding and a fair and adequate price for the wood. If so, it could not be said that competition was unduly restricted. The question is one calling for evidence to show how and to what extent it was reasonably probable that those who had wood for sale were affected.
The first cause of action is brought to recover a loss sustained on the Perry contract. The effect of that contract on this cause of action has not been much discussed by counsel. There are three causes of action stated in the complaint, and the demurrer is interposed to the whole complaint, so that if any good cause of action is stated the order appealed from is erroneous. .We do not deem it necessary to decide on the validity of that contract, or to what extent, if any, it would affect the plaintiff’s right of recovery on its first cause of action should the contract be held void.
Sec. I747e, Stats, of Wis., is a copy of the federal statute, except that it applies to attempts to monopolize trade and commerce within the state and prescribes a lesser penalty for its violation than is provided for in the act of Congress. It originally appeared as ch. 219, Laws of 1893. Since then it has received substantially the same construction, sub silen-tio at least, that was placed on the federal law in the Standard Oil and Tobacco Gases, as will be seen from an examination of the following cases decided since the law was enacted: Cottington v. Swan, 128 Wis. 321, 107 N. W. 336; My Laundry Co. v. Schmeling, 129 Wis. 597, 109 N. W. 540; Kradwell v. Thiesen, 131 Wis. 97, 111 N. W. 233; Burton v. Douglass, 141 Wis. 110, 123 N. W. 631; Eureka L. Co. v. Long, 146 Wis. 205, 131 N. W. 412; Ruhland v. King, 154 Wis. 545, 143 N. W. 681; Nat. D. Co. v. Cream City I. Co., supra; Richards v. American D. & S. Co. 87 Wis. 503, 58 N. W. 787; Tecktonius v. Scott, 110 Wis. 441, 86 N. W. 672. If the above statute has any application to the facts in this case, it should receive the same interpretation that was placed on the federal act, from which it was taken, by the supreme court of the United States.
By the Court. — Order reversed, gnd cause remanded for further proceedings.