173 Mo. 356 | Mo. | 1903
This is a proceeding by quo warranto, instituted by the Attorney-General ex-officio, to oust the defendant corporations from their franchise to do business in this State, because of alleged violations by them of their powers and privileges.
The information charges that between August 22, 1899, and May 9,1902, they ‘ entered into an agreement, confederation, combination, pool and understanding among themselves, and with each other and Nelson Morris & Company, and Schwartzchild & Sulzberger, and other corporations and persons, to regulate, fix, and control the price to be paid by retail butchers and others for all dressed pork, beef and cured meats and
The information charges that “respondents and those who have combined with them, own, control and supply to the general public, ninety per cent of the dressed pork, beef and meats and all smoked and cured pork, beef and meats and lard and all fresh beef and pork and meats slaughtered, manufactured and cured and prepared and offered for sale or sold for general consumption in the State of Missouri, and that the object and purpose of said combination and agreement is to fix, regulate and maintain the price to be paid by the consuming public for said products above mentioned, and to control said price when so fixed, maintained and regulated and to destroy competition among' themselves and others engaged in like business;” it is charged that “the officers, managers, agents, servants, and employees of the respondents, legally and fully authorized by each of the said several respondents to
The information then charges that, “the said prices which should be so charged in Missouri for the
Informant then charges'that “the general nature and object of the said combination, pool, agreement and confederation so made as aforesaid by the said respondent coiporations by the means and in the manner aforesaid, are:
“First, to fix, regulate, maintain and control by the respondents the price and prices to be paid for all classes, kinds, brands and grades of dressed beef, dress*372 ed pork, hams, bacon and all kinds of cured meats and lard, sold to the retail butchers and dealers in all kinds of fresh and cured meat and the consuming public in the cities of St. Joseph, Kansas City, St. Louis and throughout the State of Missouri.
‘ ‘ Second, to maintain the said price or prices when so fixed as aforesaid to be paid for all classes, kinds and brands of dressed beef, dressed pork, hams, bacon and'all other cured meats and lard by the retail butchers, dealers in meat and the consuming public in the cities of St. Joseph, Kansas City, St. Louis and throughout the State of Missouri; and
“Third, that it is one of the objects of said combination, agreement, pool and confederation so made as aforesaid by the respondent corporations by the means and in the manner aforesaid to prevent, prohibit and avoid competition among themselves and others in the sale in Missouri of the said commodities dealt in and handled by the said respondents.”
The information then charges that “the respondents by the means and manner aforesaid have obtained control of and monopolized to the exclusion of all others, the business of selling all classes and kinds and grades and brands of dressed beef, dressed pork, hams and bacon and cured meats and lard, to the retail butchers, dealers in meat and the consuming pubr lie in the State of Missouri to the great detriment of the public.”
It is then charged that “by reason of the monopoly and control and exclusion of competition in the sale of said commodities aforesaid in the manner and means aforesaid, the respondents and their agents, officers and managers, have been enabled and now are selling to the butchers and dealers in meat and the consuming public in Missouri, certain grades of dressed beef, pork, hams, bacon, cured meats and lard of an unwholesome and inferior quality, to the great detriment of the public.”
It is then charged that “by reason of the premises and facts aforesaid since the 21st of August, 1899, and up to the present time, respondent corporations have grossly offended against the laws of this State and willfully and flagrantly and grossly abused and misused their corporate authority and franchises and privileges and have willfully and unlawfully assumed and willfully usurped authority and privileges not granted said corporations by the laws of Missouri by entering into and becoming a member of and a party to said trust, combination, confederation and pool as aforesaid, to monopolize and control the business of selling dressed beef, dressed pork, ham, bacon and all cured meats and lard in the State of Missouri and by means of said combination aforesaid to prevent competition in said business and to regulate, fix and maintain the price or prices to be charged retail butchers, dealers in meat and the consuming public for the aforesaid
The prayer of the petition is “that respondent corporations each and all of them severally be excluded from all corporate rights and franchises under the laws of the State, and that their rights, authority, license and certificate to do business under the laws of Missouri be declared forfeited, and that each of them and every one of them be ousted from their several franchises, corporate rights and privileges.”
The Krug Packing Company answered separately, denying generally the allegations of the information.
The other respondents answered jointly, setting up many specific defenses. On motion of the Attorney-Greneral the court struck out all of the defenses except the sixth paragraph of the second defense pleaded, which “first alleged the corporate organization of each of the above named Armour, Hammond and Cudahy and Swift packing companies as corporations and their right to do business in Missouri, and then respondents denied that they ever made or entered into an agreement, confederation, combination, pool or understanding, by and among either of them or any other person or corporation to regulate, fix and control the price to be paid by retail butchers or any one else for any kind of pork, beef, cured meats or lard, slaughtered or manufactured, prepared or offered for sale or to be sold in the State of Missouri and else
It will be seen that this paragraph is in substance a general denial, and raised a general issue upon the pleadings.
All of the respondents, except the Krug Packing Company, which is a Missouri corporation, are corpo
Of the other corporations and persons alleged to have been with the respondents in the combination, Schwartzschild & Sulzberger Company had its plant in Kansas City, Kansas, and had “coolers” in Kansas City and St. Joseph, Missouri, and Nelson Morris & Company had their plant in East St. Louis, Illinois, and had “coolers” in St. Louis, Kansas City and St. Joseph.
The case was referred to Hon. I. H. Kinley, a member of the Kansas City bar, as special commissioner to take the testimony and make and report a
The report of the special commissioner covers twenty-five printed pages and is too voluminous to be -embodied herein. In brief, he finds:
1. That the respondents, together with Nelson Morris & Company, between August 21, 1899, and May 9, 1902, entered into “agreements, confederations, combinations and understandings between themselves, to fix, regulate and control the prices of dressed beef, and fresh pork, slaughtered, manufactured, prepared and offered for sale, or to be sold by respondents to the retail butchers and others at St. Joseph, Missouri, and that respondents, with Nelson Morris & Company, agreed among themselves and with each other to maintain and control the prices of such dressed beef and fresh pork, and that in pursuance of said agreements to fix, maintain, and regulate the prices for which said dressed beef and fresh pork should be sold, said respondents above named, during said time between August 21, 1899, and May 9, 1902, have sold to the butchers at St. Joseph, Missouri, said dressed beef and fresh pork at the prices so fixed, regulated and maintained, except where such respondents gave rebates in money or in pounds of meat to their customers.”
2. The commissioner makes a similar finding of fact as to dressed beef in St. Louis, except that he finds that the Hammond Packing Company did not do business in that city and was not in the combination, but that the St. Louis Dressed Beef Company was in the combination in that city with the respondents.
3. The commissioner finds that the respondents, and others, in St. Louis, “about 1899 or 1900, formed a voluntary association for the purpose of meeting once a week at some hotel or place designated and discussing and fixing the list prices to be charged the butchers for fresh pork, and at' these meetings these representatives agreed among themselves and with
4. The commissioner finds that respondents at St. Joseph, St.- Louis and Kansas City sell to the trade from sixty-five to eighty per cent of all the dressed beef and from fifty to sixty per cent of all the dressed pork that is handled in those cities, but that such sales amount to “comparatively á very small portion of their business in selling fresh beef, fresh pork and provisions throughout this and foreign countries.”
5. The commissioner finds that as soon as the Attorney-G-eneral began the initiatory steps in this case all of the respondents abandoned all of the said combinations.
6. The commissioner finds that at St. Joseph and St. Louis, after meat had been in the coolers a certain length of time, the owers were allowed to sell it at a price less than the price fixed, and this is what is termed “concession meat.”
7. The commissioner excluded evidence showing that if a butcher did not pay his bills to th'e respon
8. Over the objection of the Attorney-General the commissioner permitted the respondents to show how the cattle business in Kansas City had increased from $4,210,605 in 1890 to $1,655,966,699 in 1901, but afterwards excluded all except what related to the years-1899, 1900 and 1901. The commissioner also allowed the respondents to show the number of animals the respondents killed, the number of persons they employ, and the amount they pay for salaries and expenses. He refused to allow the respondents to show by various cattle-raisers that the cattle-raising business has become more profitable since the respondents have been engaged in business, and that it would be injured if the respondents were ousted from doing business in this State.
Both sides have filed voluminous exceptions to the findings of fact by the commissioner. The case has been argued orally at length and exhaustive briefs have been filed. The evidence has been printed in full, covering two volumes aggregating nine hundred and forty-nine pages, while the brief of the informant covers one hundred and six printed pages, and the two briefs of the respondents cover two hundred pages.
I.
The statute of this State (R. S. 1899, sec. 8965), relating to “Pools, Trusts and Conspiracies,” makes it unlawful for any persons, associations, partnerships, or corporations to become a member of or a party to “any pool, trust, agreement,. combination, confederation, or understanding with any other corporation, partnership, individual or any other person or associ
The commissioner reported that over the objections of the respondents he had admitted “the statements and admissions of the managers of these coolers and solicitors of respondents showing that such combinations and agreements to fix and regulate prices as aforesaid had been made and entered into by respondents ; without such testimony it is doubtful if the existence of such combination could be found, but if such statements and admissions are admissible, as I have ruled them to be, then” he found that the respondents were guilty.
To appreciate the force of what is thus said it is necessary to understand how the respondents did business in this State. Great care has been taken to show that the business done by the respondents in this State is but an “infinitesimal” portion of the total business it does all over the world. The business done in this State is not done from the slaughtering or packing plants of the respondents, nor is it conducted or
The commissioner finds the facts in' this regard, and the conceded facts show the finding is correct, to be as follows: “A ‘cooler’ as shown by the testimony,- consists of two or more rooms, at least one of which is refrigerated, the temperature being kept down from about thirty-four to forty degrees Fahrenheit; fresh meat is taken from the packing house and placed in this refrigerating room for sale to the butchers in the city where the cooler is located. As a rule the packers only sell to the butchers who sell to the public from their shops. At each cooler is a ‘cooler manager’ in charge thereof, one or more city solicitors, who solicit trade of the butchers, and a driver, who, from a wagon driven by him, delivers the meat to the butcher, who has purchased it. As a rule the butcher goes to the ‘cooler,’ inspects the carcass he wishes to buy, and if it suits him he purchases it and it is delivered to him at his shop, and he pays therefor at the cooler.”
In other words, the purchasers deal exclusively with either the solicitors, who urge them to buy, or with the manager of the cooler. The drivers, of course, only deliver the goods. There is also a bookkeeper or cashier and an auditor at each cooler, who are subordinate to the manager, but in- referring to the statements and admissions of the agents of the respondents these subordinate agents are not intended, but the managers of the coolers and the solicitors or salesmen are alone referred to.
The statements and admissions referred to, were made by the solicitors when engaged in the business of soliciting orders from the retail butchers, and related to the prices at which sales could be made and the reasons for such prices, and to schemes and subterfuges, for billing the goods at a price stated or as of certain
The testimony introduced by the State was abundant tó show that the respondents were members of a combination or pool to fix and maintain prices. The State called as witnesses nine butchers who did business with the respondents in St. Joseph whose testimony showed that they all got rebates in money or pounds
It further appeared that no butcher could buy meat from any packer that did not do business in St. Joseph, because packers located elsewhere refused to sell to them, stating as a reason that St. Joseph was the respondents’ territory and such outside packers were afraid to invade their territory.
It further appeared that when the Attorney-General took the initiatory steps in this case, the respondents immediately dissolved, discontinued and stopped the pool and combination arrangements.
The State called eleven witnesses in St. Louis, butchers, city meat inspectors and former managers of the respondents’ coolers, who testified to the same facts, circumstances and conditions in St. Louis, as to dressed beef in St. Louis. As to dressed pork the State called five witnesses, who were themselves members of such a pool, trust or combination, who testified that the respondents (except the Hammond Packing Company) were also members of the pool; that the representatives of the pool, trust or combination met every week at either the Southern or Lindell Hotels; that the prices were fixed by an arbitrator named McCall, who was paid a salary of ten dollars a week,
It is quite too plain for doubt that persons or companies who are engaged in the same line of business, in the same place, do not bill goods at one price and give rebates in money or goods or weights, and do not give notice of an uniform advance of rates at a certain date, always followed by such a rise, and do not maintain an uniform selling price, and do not call in their competitors and get them to “concede” to them a right to sell shopworn or old goods at a price less than such uniform price, and do not gather up papers or bills • of their competitors showing that they have been selling below a certain price, and do not abandon, dissolve and discontinue their understandings or combinations as soon as the legality thereof is called in-question by the State’s officers, unless there has been an unlawful pool, trust or combination to fix and maintain prices. Such acts and circumstances and practices speak as loudly, as directly and as certainly, and tell as strong and conclusive a tale of wrongdoing in those regards as any witness could possibly testify to it or any resolution formally adopted by the directors or stockholders could prove it.
Independent, therefore, of any admissions or statements of the managers of .the coolers or of the solicitors, which, however, were clearly admissible, the State has made out a case against the respondents under the facts and circumstances of the ease. The commissioner, therefore, reached the right conclusion, and properly followed the rules of law as to the ad
As against all such direct testimony, admissions and statements the respondents offer no proofs, call no witnesses, and remain absolutely mute. They do not even do, as was done in State ex'inf. Atty.-G-enl. v. Ins. Co., 152 Mo. 1, call the chief officers of the conspirators and show that they never knew of nor authorized any such arrangements or combinations by their agents. They do not show or pretend that they have not reaped the benefits of such arrangements or combinations for all the years they existed. They simply let the State’s showing stand uncontradicted, and content themselves with claiming that the admissions and statements were not made at the time the agents were engaged in transacting the business they were given power to transact, but were made before or after the said time, which an analysis of the evidence shows is not the fact, and with further showing how their business has increased in the last ten years, how many persons they employ, how much wages they pay, how the cattle-raising business has increased since they began business, and how it would be injured if they are ousted of their right to do business in this State, how they regulate their prices by the price of cattle, how much loss the resident companies would suffer by reason of not being allowed to operate their plants, how the butchers in St. Joseph are as bad as they are, and worse, because while they sell concession beef to the butchers at reduced prices, and give butchers rebates to get their trade from each other or to retain their trade, the butchers do not sell concession meat any cheaper to the public, nor do they give the public the benefit of any rebates, and that the butchers belong to a union, which fixes the price of meat for
None of these matters constitute any defense or bar to this action. The commissioner admitted the testimony bearing on most of these matters for the purpose of enabling the court to be fully advised as to all the conditions when it came to fixing the punishment to be imposed.
“Competition is the life of trade.” Pools, trusts and conspiracies to fix or maintain the prices of the necessaries of life, strike a.t the foundation of government; instill a destructive poison into the life of the body politic; wither the energies of competitors, blight individual investments in legitimate business; drive small and honest dealers out of business for themselves, and make them mere “hewers of wood and drawers of water ’ ’ for the trust; raise the cost of living and lower the price of wages; take from the average American freeman the ability to supply his family with necessary, adequate and wholesome food; force the boys away from school, and into the various branches of trade and labor, and the girls into workshops and other avenues of business, and make them breadwinners while they are yet almost infants, be- - cause the head of the house can not earn enough to feed and clothe his family.
The people are helpless to protect themselves. The powers that be must protect them, or as surely as history records the story of republican government m Borne, so surely will the foundations of our government be shaken and its- perpetuity threatened. Missouri (State ex inf. Atty.-General v. Insurance Co., 152 Mo. 1); New York (People v. Sheldon, 139 N. Y.
The rule is well stated in the syllabus to People v. Sheldon, 139 N. Y. 251: “A combination between independent dealers to prevent competition between themselves in the sale of an article of prime necessity [the combination was to fix and maintain the price of coal] is, in the contemplation of law, a,n act inimical to trade or commerce, without regard to what may be done under and in pursuance of it, and although the object of such a combination was merely the due protection of the parties against ruinous rivalry, and no attempt was made to charge undue or excessive prices; where it appears that the parties acted under the agreement, an indictment for conspiracy is' sustainable. ’ ’
The court further aptly says:
“But the question here does not, we think, turn on the point whether the agreement between the retail dealers in coal did, .as matter of fact, result in injury to the public or to the community in Lockport. The question is, was the agreement, in view of what might have been done under it and the fact that it was an agreement the effect of which was to prevent compe*389 tition among the coal dealers, one upon which the law affixes the brand of condemnation. It has hitherto been an accepted maxim in political economy that ‘competition is the life of trade.’ The courts have acted upon and adopted this maxim in passing upon the validity of agreements, the design of which was to prevent competition in trade, and have held such agreements to be invalid. It is to be noticed that the organization of the ‘exchange’ was of the most formal character. The articles bound all who became members to conform to the regulations. The observance of such regulations by the members was enforced by penalties and forfeitures. A member accused by the secretary of having violated any provision of the constitution or by-laws was required to purge himself by affidavit, although evidence to sustain the charge should be lacking. The shippers of coal were to be notified in case of persistent default by the member that ‘he is not entitled to the privileges of membership in the exchange.’ No member was permitted to sell coal at less than the price fixed by the exchange. The organization was a carefully devised scheme to prevent competition in the price of coal among the retail dealers, and the moral and material power of the combination afforded a reasonable guaranty that others would not engage in the business in Lockport except in conformity with the rules of the exchange.
“The cases of Hooker v. Vandewater (4 Den. 349), and Stanton v. Allen (5 Id. 434) are, we think, decisive authorities in support of the judgment in this case. They were cases of combinations between transportation lines on the canals, to maintain rates for the carriage of goods and passengers, and the court, in those eases, held that the agreements were void, on the ground that they were agreements to prevent competition, and the doctrine was affirmed that agreements having that purpose, made between independent lines of transportation, were, in law, agreements injurious*390 to trade. In those cases it was not shown that the rates fixed were excessive. In the case in 5th Denio, the judge delivering the opinion referred to the effect of the agreement upon the public revenue from the canals. This was an added circumstance, tending to show the injury which might result from agreements to raise prices or prevent competition. [See, also, People v. Fisher, 14 Wend. 10; Arnot v. P. & E. Coal Co., 68 N. Y. 558.] The gravamen of the offense of conspiracy is the combination. Agreements to prevent competition in trade are, in contemplation of law, injurious to trade, because they are liable to be injuriously used. The present case may be used as an illustration. The price of coal now fixed by the exchange may be reasonable in view of the interests both of ‘dealers and consumers, but the organization may not always be guided by the principle of absolute justice. There are some limitations in the constitution of the exchange, but these may be changed and the price of coal may be unreasonably advanced. It is manifest that the exchange is acting in sympathy with the producers and shippers of coal. Some of the shippers were present when the plan of organization was considered, and it was indicated on the trial that the producers had a similar organization between themselves. If agreements and combinations to prevent competition in prices are or may be hurtful to trade, the only sure remedy is to prohibit all agreements of that character. . If the validity of such an agreement was made to depend upon actual proof of public prejudice or injury, it would be very difficult in any case to establish the invalidity, although the moral evidence might be very convincing. We are of opinion that the principle upon which the case was submitted to the jury, is sanctioned by the decisions in this State, and that the jury were properly instructed that if the purpose of the agreement was to prevent competition ¿n the price of coal between the retail dealers, it was illegal and justified the conviction of the defendants.”
It is not essential that the combination or trust shall constitute a complete monopoly. For as was said by Mr. Chief Justice Fuller, in United States v. Knight, 156 U. S. l. c. 16: “Again, all the the authorities agree that in order to vitiate a contract or combination it is not essential that its result shall be a complete monopoly; it is sufficient if it really tends to that end and to deprive the public of the advantages which flow from free competition.”
As was well said by Best, C. J., in Homer v. Ashford, 3 Bing. 326: "The law will not permit any one to restrain a person from doing what his own interests and the public welfare require he should do. ’ ’
The wisdom and experience of all ages and all people have demonstrated the necessity for such laws, and for the rigid enforcement of them. And even after so many years of unfailing enforcement of such laws, the terrors and consequences thereof have not been sufficient to deter people from violating them.
The conclusion is irresistible that the defendants .-are guilty of being members of a trust, pool or conspiracy to fix and maintain the prices of dressed beef and dressed pork in this State at the times charged in the petition, except as before stated, Armour & Company, and the Henry Krug Packing Company, as to whom the writ must be quashed.
II.
This leaves only the question of punishment. The punishment to be imposed rests in the sound judicial discretion of the court. It need not necessarily be a general judgment of ouster. It may be an ouster of the right to do the particular act complained of (State
Under all the circumstances, a judgment of absolute ouster is not necessary, but the ends of justice will be satisfied by the imposition of a fine, and the payment of all the costs in the case. It is accordingly ordered that the respondents, the Armour Packing Company, the Hammond Packing Company, the Cudahy Packing Company and Swift & Company, each pay to the clerk of this court within thirty days from this date, the sum of five thousand dollars as a fine, and that they also pay the costs in this case. And it is further ordered that if the respondents or any of them fail to pay said fine, and costs, within said time then they or those so failing be ousted of all rights, privileges and franchises of every nature and kind, conferred upon them by the laws of this State, and be forever prohibited from doing business in this State.