Ricou v. Crosland

81 Fla. 574 | Fla. | 1921

Lead Opinion

Ellis, J.

This is an appeal from an order overruling a demurrer to a bill in equity brought by J. G. Crosland and others as trustees for the Miami Fish Company, a corporation, against R. R. Ricou and others, a co-partnership doing business as Ricou Fish Company, for an accounting in a matter resulting from an alleged agreement between the parties whereby they agreed to combine their respective interests in the fishing business at Miami and Key West. The bill alleged that the Ricou Fish Company was engaged in the fish business in Miami and Key West, and that the Miami Fish Company was engaged in the fish business in Miami. That in August, 1917, the copartnership and the corporation verbally agreed that for the fishing season of 1917 and 1918 they would “combine their interests” at Miami and Key West, “which interest consisted of all mullet, mackerel, blue fish, pompano and king mackerel which may be obtained or produced or shipped” by the Miami Fish Company and the Rieou Fish Company at “Miami or Key West or both such places, whether said fish were caught by the corporation or- the partnership or any persons in their employment, or in any manner purchased or handled by them, and after deducting “set expenses” then agreed upon, the profits should’be equally divided between the parties, and the losses sustained should be equally borne. That the Miami Fish Company in October, 1917, reduced to writing its understanding of this agreement and forwarded it to the Rieou Fish Company in the form of a letter, which was received by the latter company and its terms agreed to. The letter was an amplification of the verbal agreement as the same was set out in the bill. That is to say, it was an explanation of the term “combine their interests” as used in the bill respecting the verbal agreement. According to the agreement as explained by the letter, the proceeds of the sale of all fish such as mentioned, whether produced or shipped by the corporation or the partnership, were to be equally divided between them, after the “set expenses” were deducted. A method was agreed upon for fixing the price on all fish, by starting with an arbitrary base for such price. It was agreed that this so-called base for a price to be charged for the fish, consisted of the amount per pound which the company or partnership paid the fishermen pins two cents per pound for expenses in handling certain kinds of fish, and one cent per pound for handling another kind. The Miami Pish Company was to sell all mullet delivered or shipped from Miami, whether caught by that company or the Ricou Pish Company, and the latter company was to have “full and entire charge of all mackerel, blue fish, pampano, and in fact any kind of fish shipped from Key West.” The Miami Fish Company was to have no “voice in handling this matter unless called upon by the Ricou Pish Company,” in which case no charge was to be made for the service. Regarding king mackerel it was agreed that the “bulk of these fish” should be handled from Miami, and each “firm” would be allowed 1 cent per pound for “packing expenses” of such fish over the cost price to fishermen. The parties were to lend each other boats without charge. There were some provisions relating to the business of the R. R. Ricou & Sons at Jensen, and the Miami Pish Company’s retail fish business and “hotel orders” which were not to “go into this pool.”

Here was an effort by a corporation on the one hand, and a copartnership on the other, by combining their interests in the fish business at Miami and Key West to further the common adventure in buying and selling fish and manipulating the market price so far as possible of that commodity. It was a combination between competing houses for the control of the fish business at the two ports named.

The demurrer to the bill was overruled. It attacked the bill upon many grounds: First, that it was without equity; that there was an adequate remedy at law; that the contract was ultra vires as to the Miami Pish Company because it was an effort to form a partnership with another; that the contract was against public policy as tending to produce a monopoly in the fish business at Miami and Key West and in restraint of trade; that the contract terms were so vague that they were incapable of enforcement; that there was no consideration upon which the agreement rested; want of mutuality and lack of consideration.

The bill alleged that the profits derived from handling of mullet for the season of 1917, ending November 20th of that year, had not been divided between the parties.to the agreement. That the Miami Fish Oompany had complied with the terms of the agreement; that it had made monthly reports of all fish sold, the invoice value of them, and the amounts received, profits made and loss sustained on each shipment, but that the Ricou Fish Company refuses to account for the fish handled by it. It was alleged that an accounting would show the Ricou Fish Company to be indebted to the Miami Fish Company in the sum of approximately twenty-five thousand dollars.

The purpose of the agreement, as disclosed by the letter of the Miami Fish Company, seems to have been to remove from the port of Miami its principal competitor in the matter of the sale of a certain kind of fish, and to eliminate itself as a competitor of its rival in the waters of Key West. And after establishing a monopoly of the fish selling business at each place, so'far as it could be done by the agreement' to divide the profits and share the losses of the undertaking. By this agreement they undertook not only to control the selling price of the fish called mullet by agreeing to an arbitrary allowance to-themselves as the cost per pound for expense in handling the fish, thus attempting to fix an arbitrary base for a selling price, but agreed upon the price to be paid to the “Ashmen” during October and November. By the use of the term “Ashmen” in the letter of explanation, we suppose the parties to the agreement referred to those Ashermen who go out to the Ashing grounds in small boats and bring in their “catch” to be disposed of by sale to one of the Ash companies, which in turn packs the Ash and prepares them for the open market. These companies appear to occupy the position of “middlemen” in-the Ash business between producer and consumer. However important a factor in the Ash business they may be, preparing the commodity for the market and providing an avenue or channel through which the supply may be carried to the consumer, the fact remains that they constitute one of the channels of trade, they supply a market for the small Asherman who Ands in them purchasers for his “catch,” and to whom he looks to sell the products of his days and nights of labor which is rewarded according to the demand when he brings in his catch. When two or more rival “middlemen” enter into a contract by which they propose to “pool their interests” to the end that both demand and price, from the standpoint of the producer, may be controlled, they violate both the spirit and letter, of the law of Florida as expressed in Chapter 6933, Laws of Florida, 1915. See Weidman v. Shragge, 46 Can. Sup. Ct. 1, Ann. Cas. 1912D, 919; Nester v. Continental Brewing Co., 161 Pa. St., 473, 29 Atl. Rep. 102.

Counsel for appellees contend that the agreement can only be construed to be in partial and not general restraint of trade as a reasonable agreement having for its object a beneAt to the parties, but no injury to the public, although in its operation it might be effective to restrain trade in the Ash business in some degree. Thai at most the agreement was in reasonable restraint oí competition, bnt not in restraint of trade.

The substance of this doctrine is laid down in Mitchel v. Reynolds, 1 Peere Williams’ Rep. 181. See also 27 Laws of England (Halsbury) 550.

But under such rule the requisites of a valid restraint were reasonableness, good consideration and definiteness of terms. The agreement was considered in its entirety and its reasonableness depended upon the consideration of its necessity for the protection of the interests of the covenantee.

Our view of the contract is that its obvious purpose was to prevent or lessen competition in the commodity in which the two companies dealt to the injury of the producers and consumers, and which was the subject of commerce or trade at the two ports, and was therefore in violation of the act above mentioned and void. The demurrer should therefore have been sustained.

The order is reversed, with directions to sustain the demurrer and dismiss the bill.

Taylor and West, J. J., concur.

Browne, C. J., and Whitfield, J., dissent.

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Dissenting Opinion

Browne, C. J.,

dissenting.

I cannot find in the agreement that is the basis of this suit anything to indicate an attempt in anywise to control either the demand for, or the price of the fish that was the subject of the agreement. The situation presented appears to be this: The Ricou Pish Company and the Miami Fish Company were engaged in catching from their own boats, and in buying from other boats, mullet, mackerel, blue fish, pompano, grouper and snapper and other bottom fish. The Ricou Fish Company operated plants at Jenson, Key West and Miami; the Miami Company operated at Miami. The agreement with regard to handling the fish was that the Miami- Fish C'o. was “to sell all mullet caught by either of the firms that is delivered or shipped from Miami,” and the Ricou Fish company was to “have full and entire charge of all mackerel, blue fish, pompano, or in fact any kind' of fish shipped from Key West.” The bulk of the king mackerel was to be handled from Miami. The profits made by the Miami Fish Company or the Ricou Fish Compány from the sale, of mullet, mackerel, blue fish, pompano and king mackerel, after deducting set expenses, were to be divided equally between the two companies.

The original agreement was a verbal one, under which the parties operated for three months, but on October 30th the contract was reduced to writing in the form of a letter written by the Miami Fish Company reciting the verbal agreement, and an acceptance by the Ricou Co. of all the terms, conditions, statements and agreement's set forth in the letter. The agreement recites that the price of mullet in August was 2c per pound, the price in September was 2%c per pound, and during October 3%c per pound. These relate to past transactions, and cannot be construed to be price fixing agreements. The price on mullet caught in October and November “will be 3%c per pound, with the exception of gillnet mullet caught at Cape Sable. They are t'o be the price paid at Cape Sable.”

With regard to bottom fish it was stipulated “if, however, from now on, there should be any quantity of bottom flsli caught, the price can be adjusted in the following manner: the price we pay to the Ashmen plus lc per pound for expense.”

With regard to other varieties of Ash, the contract provides:

“The season is now beginning for blue Ash, Spanish mackerel and pompano, and the price on the following Ash will be based on what we .have to pay the Ashmen plus 2c per pound for expense; for instance, if we have to pay 6c per pound at Bahahunda for mackerel, whichever company does the work will be allowed 2c per pound for the expense of running and packing these' Ash, furnishing ice, gas, labor, run boats and any other expense connected with it. This will apply to mackerel, blue Ash and pompano caught with purse seines and delivered either at Miami or Key West, and we will'base the purchase price of purse seine mackerel on price we have to pay at Bahahunda.

“In basing a price on Spanish mackerel, blue Ash and pompano and other Ash, we do so at the price paid the Asherman who owns his own gear. Any boats and nets that we advance to Ashermen of our own we are at liberty to make any private deal with the captain that' we see At, and the Ash will be turned in to either company at the same price that we would pay an independent Asherman.”

Both companies had, or expected to have some boats and nets of their own engaged in Ashing, and it was stipulated that the price paid for Ash caught from boats operated by either of the companies was to be controlled by the price paid in the open market to the independent Asherman. It appears that each of these companies owned or controlled boats that were better adapted to the needs of the other than to itself, and it was stipulated that the Miami Company should loan the' Ricou Company free of charge its auxiliary schooner Columbia and gasoline boat' Bloxam, and the Ricou Company was to loan the Miami Company free of charge the auxiliary schooner Hope.

The main purpose of this agreement was to have all the fish of one variety handled by one of the companies, and the other varieties by the other company.

Neither the bill nor the contract discloses the reason for handling the fish in this manner, but it might well have been that each company had customers and markets for the respective varieties it was to handle and by this system planned to reduce the expenses incident to advertising and finding new customers and markets, and of maintaining and operating the extra plant at Key West.

The assumption that the Ricou Fish Co. and the Miami Fish Co. were the only persons, corporations or firms engaged in the fish business at Key West and Miami, and that therefore the combination of these two was in restraint of competition or in restraint of trade, or created a partial 'monopoly' by eliminating all competition in the purchase of -fish from independent fishermen, does not find support in thé record, as I read it.

The mullet business had been carried on for nearly three months under the verbal agreement, and the reference in the written contract to the price of mullet was the actual price'paid during the months of August, September and October. ’ Each of these' companies was engaged in the business'of catching fish-from'its own boats' and in addition to this'they’bought-fish in the open market and merely agreed between themselves' 'that in adjusting» their accounts each would be allowed to charge the other the price paid the fishermen, plus a certain amount to be allowed for the expense of running' and packing this fish, furnishing ice, gas and labor, running boats and any other expense connected with it.

Nowhere in the contract, so far as I can see, is there any attempt to control the price that was to be paid to the independent fishermen; or to prevent or lessen competition in the commodity in which the two companies dealt to the injury of the producer and consumer. On the contrary, cutting down overhead expenses; eliminating the expense of opening two plants at Key West where but one was needed; adopting a more efficient system of marketing by letting each firm handle the varieties of fish it was best capable or best prepared to market advantageously, tended to reduce the cost to the consumer, and benefit, rather than injure, him.

Holding these views, I am forced to dissent.

Whitfield, J., concurs in this dissent.