[566] This original proceeding in quo warranto was instituted by the filing on June 29, 1950, of an information charging seven corporate respondents with violations of the Missouri anti-trust statutes. Sections 416.010 to 416.040, incl. (All statutory references herein are to RSMo 1949, Y.A.M.S.) After the *356 filing of separate answers by respondents, an order was entered on [567] November 13, 1950, appointing Lyman Field, Esq., as special commissioner to take evidence upon the issues joined and to report the evidence thus taken, together with his findings of fact and conclusions of law. Following extended hearings, our commissioner filed his report on September 8, 1953, in which he concluded that none of the respondents had violated the Missouri anti-trust statutes as* charged in the information. The Attorney-General (hereinafter referred to as relator) excepts to the commissioner’s findings and conclusions only as to Miles Laboratories, Inc. (hereinafter referred to as Miles).
Miles is an Indiana corporation duly registered and qualified to do business in Missouri, which manufactures and sells throughout the United States several brand-name proprietary medicines. However, the evidence was confined, almost entirely, to distribution and sale of a single product, Alka-Seltzer, which, during the period under consideration, i.e., three years prior to June 29, 1950,
1
was distributed by Miles in Missouri in three ways, to-wit, (1) by sales to retailers through nine drug wholesalers (including the other six respondents in this case, hereinafter referred to as the other respondents), who were appointed by Miles as del credere factors, (2) by direct sales to approximately one hundred thirty other wholesalers in Missouri, and (3) by direct sales to approximately seventy-five large retailers, including Katz Drug Company, operating a chain of drug stores in Kansas City and elsewhere, and (prior to May, 1949) Mil-gram Food Stores, Inc., operating a chain of grocery supermarkets in Kansas City. With each of the nine drug wholesalers in Missouri (as well as drug wholesalers throughout the nation) who were appointed as del credere factors, Miles entered into a written consignment agreement providing', among other things, that Miles would furnish a consigned stock of its products to the factor, that Miles reserved the right to designate the purchasers from whom the factor should or should not solicit orders for the consigned Miles products and reserved absolute title to such products until delivery to the purchasers thereof, that the factor would fill orders only at stated prices and discounts and would remit promptly to Miles the proceeds of sales of Miles products less the factor’s commission, and that the factor would “not enter into any contract under the fair trade laws or otherwise suggest the prices at which any purchaser of said products shall resell the same.” Noting that relator had conceded his inability to find any Missouri case indicating that such consignment agreements violate our anti-trust statutes, and pointing out that the
*357
relationship between Miles and its factors was that of principal and agent [State ex rel. Parker v. Thompson,
We turn to the issue as to Miles. The information closely follows the language of Sections 416.010 to 416.040, inch,
2
and [568] in general terms charges violations of each of those statutes. However, the gravamen of relator’s charge is that Miles was guilty of so-called
vertical
price-fixing, i.e., the fixing and maintenance of resale prices; and, the determinative questions here are (1) whether Miles entered into any arrangement, agreement or understanding to fix or maintain the resale price of Alka-Seltzer or to lessen full and free competition in the sale thereof and (2) if so, whether such action violated the Missouri anti-trust statutes. Having found that “no price-fixing agreements were shown or proved by the evidence,” our commissioner deemed it unnecessary to rule the second question. Although a commissioner’s findings may be persuasive [State ex inf. Barker v. Armour Packing Co.,
As readily acknowledged by its President, Mr. Walter R. Beardsley, Miles has “strongly advocated” and supported fair trade legislation throughout the nation and has been a leader in procuring enactment of such legislation in forty-five states, Missouri being one of only three states which does not have a fair trade act. (The other two are Texas and Vermont.) Since 1934, Miles has followed consistently the policy of refusing to sell Alka-Seltzer to those who do not maintain the suggested minimum retail prices of 49c for the “60c size” and 24e for the “30c size.” Lists showing Miles’ suggested minimum retail prices for all of its products have been published and distributed to both wholesalers and retailers, and its salesmen, such as Jacob Raca, Jr., who traveled the northern half of Missouri (including Kansas City) during the period under consideration here, have been instructed to check advertised and “shelf” prices on Miles products and to report any “price violations” to their superiors promptly. It is apparent from the record that Miles’ price maintenance policy has become well known in the drug industry. As stated by Mr. Morris R. Shlensky, Executive Vice-President and General Manager of Katz, Miles is one of the “very few” drug suppliers “who are sincere about * * adherence to suggested minimum prices” and “are really severe in their policing of their (price) policy.”
Shortly after Milgram began to handle drug items about 1940, a sales representative of Miles, Stair by name, called on John W. Mabry, then manager of Milgram’s drug department, and “talked about their suggested price.” Mabry told Stair that “we will try to go along” with Miles’ price maintenance policy and, as Mabry construed it, he “made a promise” that “we would get their (Miles) suggested prices.” So long as Mabry continued as manager of its drug department, Milgram did maintain Miles’ suggested minimum retail prices, except for one brief reduction (subsequently [569] discussed with a Miles representative) to meet a price advertised by a local competitor who “made a mistake.” When Mabry was transferred to another department and Sheldon Levine became manager of Milgram’s drug department about 1946, Mabry told Levine (to use Mabry’s language) “that I agreed to kind of go along with their (Miles) policy of suggested retail prices” or (to use Levine’s language) “that he (Mabry) had agreed to maintain that price with Miles”; and, Miles’ suggested minimum retail prices were respected and maintained until March, 1949, when Levine “thought it was good business” to cut the price of Alka-Seltzer and advertised the “60c-size” first for 39c and later for 35c.
In May, 1949, Maurice Blond, Katz’ merchandise manager, called Perry L. Shupert, Miles’ sales manager, at Miles’ home office in Elk- *359 hart, Indiana, and told Shupert that Katz “no longer could ignore” Milgram’s advertised prices on Alka-Seltzer and intended to meet ■competition. Shupert “requested that we do nothing about meeting ■competitive situations.” Within a few days, Kendall McKee, Miles’ division sales manager from Chicago, and Baca, Miles’ local representative, conferred personally with Katz’ Shlensky and Blond, who ■ again urged that “we should be allowed to go along and meet the competitive situation” created by Milgram’s advertised prices. McKee “requested that we not go ahead”; and, after Katz’ Shlensky had talked over long distance with Beardsley, Miles’ president, Katz decided to maintain Miles’ suggested prices on Alka-Seltzer for the time being.
Levine,-Milgram’s drug manager, having refused Shuper-t’s telephonic request and McKee’s personal request to raise Milgram’s retail price on Alka-Seltzer to Miles’ suggested minimum, Miles’ Shupert wrote Baca, Miles’ local representative, on May 13, 1949, that Levine had been notified “that we would refuse to sell him any more merchandise,” and that “We will write all wholesalers in the area which services all of their outlets, advising them not to accept any orders for merchandise. 3 In the meantime, you will have to do a thorough job of policing your wholesalers in the Kansas City area to determine whether or not any of these tobacco, candy or grocery jobbers sell Mil-gram any of our products.” Shupert also asked Baca over long distance'to “see if I (Baca) can find out where he (Milgram’s Levine) is getting any Alka-Seltzer and they can cut him off.” In response to Shupert’s requests for “a thorough job of policing * wholesalers’'’ (not confined to factors), Baca said that he called on seven wholesalers (only three of whom were factors) and told each, in susbstance, that Miles “was having trouble with Milgram over the price violation” as to Alka-Seltzer and “we would like to have them cooperate with us and not to sell” any Miles products to Milgram. According to Baca, each wholesaler’s representative said that “he would try to cooperate with us.” The only such representative who testified, G. E. Stockton of Gibson Products' Company {not a factor), stated that he had told Baca that “I would work with him,” although admitting on cross-examination k secret intention to sell Miles products to Milgram whenever he could. '
After the early part of May, 1949, 'Milgram’s orders to Miles’ home office were not filled, but Milgram subsequently obtained Alka-Seltzer *360 by purchase from the Plattner Company, a Kansas City wholesaler, pursuant (as Levine averred but Raca denied) to arrangement made by Raca contrary to his employer’s direction. In any event, Milgram continued to advertise Alka-Seltzer at prices below those “suggested” by Miles, so Katz’ Shlensky again complained [570] to Miles’ Shupert. By letter dated June 2, 1949, Shupert told Raca of a long distance telephone call “just received” from Shlensky, instructed Raca “to send us copies of the news items showing all of the price violations by the Milgram people,” and said “I want to caution you about selling to •any tobacco, candy, notion, grocery jobbers, etc., quantities beyond their normal requirements and purchases they have made heretofore.” On June 24, 1949, Miles’ Shupert wrote Raca that “we are checking on several of their (Milgram’s) sources of supply and if we can get complete evidence we will stop their activities along this line.” And, in his letter of October 19,1949, Shupert again admonished Raca “that you should carefully watch any account in your territory that might be supplying them (Milgram) with this merchandise,” warned him that Milgram “could very easily be buying Alka-Seltzer from one of your tobacco or candy accounts” (none of whom were shown to have been factors), pointedly told Raca that “if you can find if any of them have sold any merchandise to Milgram * * * you should warn them that Milgram should not be sold,” and assured him that “if you can find out any information through any employee in their (Mil-gram’s) warehouse as to where they can get this merchandise, it certainly would be a feather in your hat because we would cut them off immediately. ’ ’
Katz’ Shlensky and Blond, who had been “biding time” while Miles unsuccessfully sought to ascertain and cut off Milgram’s source of supply, finally concluded that “we were not going to ignore” the MilgTam competition any longer, “whatever eonseqences * might come.” Having “prepared ourselves by having a very heavy quantity of merchandise in the warehouse,” Katz advertised the “60c size” of Alka-Seltzer for 33c on Sunday, October 30, 1949. The following day Philip Small, president of Parkview Drugs, Inc., operating seventeen drug stores in Kansas City, sent Miles a copy of the Katz advertisement, assuring Miles in the letter of transmittal that “the price of Alka-Seltzer has always been maintained according to your wishes at 49e by all drug chains during the past years, ’ ’ pointing out that ‘ ‘ AlkaSeltzer has been broken to 33c” by Katz, inquiring about “your attitude in this matter,” and affirming Parkview’s desire “in work with you as we have done in the past.” Miles’ Raca also reported the Katz advertisement to his superior, McKee.
“Within the next day or two,” President Beardsley of Miles called Katz ’ Shlensky over long distance. Shlensky pointed out to Beardsley that Katz “had, at the expenditure of many millions of dollars, built *361 up a reputation with, the public for being severely competitive, ’ ’ that “we were being very embarrassed” by Milgram’s “price competition on Miles Alka-Seltzer that we had taken * for an extended period of time and, in cooperation with Miles, we hadn’t done anything about it,” and that “we finally felt that we had to meet competition.” Beardsley launched into an extended discussion of price maintenance, ! ‘ confirmed that Miles had been the protector of the drug industry or one of the most important ones for a good many years, ’ ’ told Shlensky that he “should be ashamed to talk about meeting grocery store competition,” and “asked that we discontinue advertising any cut price on Miles Alka-Seltzer.” After some discussion of “the penalty of not adhering to their (Miles’) price policy,” Shlensky suggested that, if Miles should refuse to sell Katz in Kansas City, perhaps Miles would continue to sell Katz in “fair trade states.” Beardsley “refused to go along with us on that” and bluntly “asked me (Shlensky) what we proposed to do.” Shlensky said that “we would talk it over.” The following day Shlensky called Beardsley, who was “very happy” when Shlensky told him that “we had decided to go along with Miles Laboratories on maintenance of prices” and “we would immediately discontinue the practice of cutting prices.” Miles’ Shupert promptly wrote Small, Parkview’s president, “that we have contacted Katz * * and straightened out this matter satisfactorily — thank you very much for calling it to our attention.” Thereafter, Katz observed Miles’ suggested minimum retail [571] prices until another quo warranto proceeding against other respondents “was settled.” Katz’ Shlensky “knew then that Miles would not refuse to sell us if we cut prices, and we immediately started to meet competition and to cut prices on Alka-Selzer” and “we have been ever since.”
The foregoing review of the evidence hearing on the Milgram-Katz affair will suffice to show Miles’ avowed desire and obvious efforts to cut off Milgram’s source of supply of Miles’ products, whatever and wherever that source might have been; and, since Miles ’ Raca induced four wholesalers (in addition to three factors) to agree that each “would try to cooperate with us” in refusing to supply Milgram, the record fairly supports a finding that Miles entered into a combination, agreement or understanding, in direct violation of Section 416.-010, for the purpose of refusing to sell to Milgram. Empire Storage & Ice Co. v. Giboney,
Miles’ defense is anchored to the “single trader doctrine,”
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recognized in both our state
4
and federal
5
courts, that one engaged in a private business may buy from whomsoever he pleases and may sell, or refuse to sell, to whomsoever he will. But, there is an obvious difference between a mere refusal to sell and an agreement or understanding to fix ór maintain retail prices [United States v. A. Schrader’s Son,
We have not overlooked Shlensky’s answer on cross-examination, on which Miles leans heavily, that “we never had an agreement with Miles, no, just an understanding”; but,
when read in context,
that statement simply tends to confirm the existence of an unlawful and prohibited “understanding”. Miles’ contention that, as used in Sec-tions 416.010 to 416.040, inch, the term “understanding” connotes “an agreement of opinion or feeling” [Webster’s New International Dictionary, 2nd Ed., p. 2769] rather than mere knowledge, discernment [572] or comprehension [cf. United States v. United Shoe Machinery Co., D.C. Mo.,
We are persuaded also that, about the time Milgram began to handle drug items in 1940, Miles and Milgram entered into an understanding as to maintenance of the retail price of Alka-Seltzer. Although this was more than three years prior to institution of this proceeding, the applicable limitation prescribed by Section 516.130 does not refer to the date of entry into the forbidden agreement or understanding but rather to the date of the last proven act thereunder [State on inf. of Taylor v. American Ins. Co.,
That Katz (after another quo warranto proceeding against other respondents “was settled”) and Milgram (in March, 1949) sold AlkaSeltzer at reduced prices and thus “were treacherous” to Miles does not tend to disprove existence of the unlawful understandings as to retail price maintenance, for parties to unlawful as well as lawful understanding's may, for selfish purposes, violate them. State ex rel. Crow v. Firemen’s Fund Ins. Co., supra, 152 Mo. loc.cit. 40, 52 S.W. loc.cit. 606.
Finding that Miles entered into understandings with Katz and with Milgram, which were designed to maintain the resale price of Alka-Seltzer and tended to lessen full and free competition in the sale thereof, it becomes necessary to rule the issue, presented as one of
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first impression in this jurisdiction, as to whether
Vertical
resale price maintenance agreements or understandings are within the prohibition of our anti-trust statutes. We have examined-all of the numerous cases cited by diligent and resourceful counsel (most of which are discussed in the annotations at
Our Missouri anti-trust law is written in such plain and comprehensive language that this court on one occasion thought that it “leaves scant room for construction” [State ex rel. Kimbrell v. People’s Ice, Storage
&
Fuel Co.,
But if (contrary to our expressed opinion) the case at bar afforded any reason or basis for judicial construction of the Missouri antitrust law, we are reminded that the primary rule in statutory [574] construction is to ascertain and give effect to the legislative intent [see cases collated in West’s Missouri Digest, Vol. 26, “Statutes”, Key No. 181(1) ] and that remedial statutes enacted in the interest of the public welfare should be construed with a view to suppression of the mischief sought to be remedied. 11 The conditions which motivated enactment in 1891 of anti-trust legislation in Missouri have been recently considered and discussed at length in the exhaustive and erudite report of Special Commissioner Rush IT. Limbaugh in State on inf. Taylor v. Armour & Co., No. 42185 [not reported], to which the interested are referred. 12 As was so ably demonstrated in that report, nothing in the literature or recorded incidents of that period indicates “that the revolt against the evils in the business practices of the times * * * was less determined or less articulate” against vertical price-fixing than against horizontal price-fixing, and “there is nothing in the provisions of the three sections [Sections 416.010, 416.020 and 416.040] * * * and nothing in their history which indicates that by them the legislature meant only to invalidate (horizontal) price-fixing combinations among competitors.”
The record before us is replete with what counsel for one respondent aptly denominated as “elaborate philosophical discussions” concern
*366
ing the economic desirability vel non of fair trade legislation, all of which is beyond and without the pale of our inquiry. For, when the legislature, acting within its constitutional orbit, has declared the public policy of the state, “such declared policy is sacred ground which we may not invade” [State ex rel. Barrett v. Boeckeler Lumber Co., supra, 301 Mo. loc.cit. 544, 256 S.W. loc.cit. 204]
13
and we are not permitted to concern ourselves “with the winds of economic doctrine.” Yankwieh, “Competition, Real or Soft?”,
[575] Our finding that Miles entered into illegal resale price maintenance understandings with Katz and Milgram malíes it unnecessary to review and discuss the evidence pertaining to administration of Miles’ “refusal to sell policy” elsewhere in Missouri.lt will suffice to point out that an unlawful agreement to fix or maintain prices may not be inferred from uniformity of prices charged for a given article, absent any showing that such uniformity is an artificial *367 condition, 15 and that, considered in the light of this principle, the evidence in the instant case affords insufficient support for relator’s contention that Miles’ activities “resulted in a system of implied agreements and understandings with retailers throughout the state.”
The record before us reflects no challenge of or threat to Miles’ resale price maintenance policy in the Kansas City area, other than that posed by the sales of Alka-Seltzer at reduced prices by Katz and Milgrana, who are in that market the leading ‘ ‘ cut-rate ’ ’ competitors in drug sundries, as was stated by Parkview’s Small whose seventeen drug stores in Kansas City put Parkview in third place far behind Katz; and, the transcript adequately demonstrates that Miles regarded the so-called Milgram-Katz affair as of major significance and importance. Indeed, the understanding between Miles and Katz was reached with Miles’ president and as a direct result of his blunt and effective “persuasion”, so Miles’ instant difficulty may not now be laid at the door of hirelings, in absentia at the trial, presently said to have had no authority to “administer” Miles’ “refusal to sell policy” in Missouri, 16 nor may it be brushed aside or dismissed summarily as the unfortunate but excusable product of sporadic activity on the part of overly-enthusiastic sales representatives. Miles, with a not inconsiderable background of knowledge and experience in this field, apparently took in respect of the Milgram-Katz affair a calculated risk that its action iia this “non-fair trade state” would not become the subject of judicial scrutiny and review. After careful consideration of every aspect of the matter, we are of the opinion that assessment of a fine of $5,000 and costs against Miles, in lieu of forfeiture of its fight and privilege to do business in this state [Section 416.070], constitutes a reasonable penalty for Miles’ violations of our antitrust statutes.
It is, therefore, the judgment of this court that, upon our finding of Miles’ guilt in the particulars hereinbefore stated, a fine of $5,000 and the costs> of this proceeding should be aiad hereby are assessed against Miles,- which said fine and costs shall be paid to the Clerk of this Court within sixty days after the date of adoption of this opinion ; that, should Miles fail to pay said fine and costs within the stated period, the State of Missouri shall have execution therefor to be levied lay the Marshal of this Court and enforced according to the laws of this state in such cases made and provided, this Court retaining juris *368 diction of the case until said fine and costs be paid by Miles; and, that all of the other respondents herein should be and hereby are discharged without day.
Notes
Seetion 416.010 provides that “Any person who shall create, enter into, become a member of or participate in any pool, trust, agreement, combination, confederation or understanding- with any person or persons in restraint of trade or competition in the * * purchase or sale of * * * any article or thing bought or sold whatsoever, shall be deemed and adjudged guilty of a conspiracy in restraint of trade * *
Section 416.020 provides that “Any person who shall create, enter into, become a member of or participate in any pool, trust, agreement, combination, confederation or understanding with any other person or persons to regulate, control or fix the price of * * * any article or thing whatsoever, of any class or kind bought or sold, * * * or to maintain said price when so regulated or fixed, * * * * * shall be deemed and adjudged guilty of a conspiracy in restraint of trade * *
Section 416.040 provides that “All arrangements, contracts, agreements, combinations or understandings made or entered into between any two or more persons, designed or made with a view to lessen, or which tend to lessen, lawful trade, or full and free competition in tbe * * sale in this state of any * * article, or thing bought and sold, of any class or kind whatsoever, * * * and all arrangements, contracts, agreements, combinations or understandings made or-entered into between any two or more persons which are designed or made with a view to increase, or which tend to increase, tbe market price of any * * article or thing, of any class or kind whatsoever bought and sold, * * * are hereby declared to be against public policy, unlawful and void; and any person or persons creating, entering into, becoming a member of or participating in such arrangements, contracts, agreements, combinations or understandings shall _ be deemed and adjudged guilty of a conspiracy in restraint of trade * *
Per-haps significantly, Shupert did not testify;, but,. John A. Cawley. Miles’ Assistant Secretary “in charge of all of the fair trade problems of the comnany.” denied that “all wholesalers in the area” had been written but produced a copy of a letter addressed on May 16, 1949, to■ thirty-six drug wholesalers in Missouri. Kansas, Nebraska.. Iowa and Illinois, who had been appointed as del credere factors, in which Miles reauested “your cboneration, until otherwise notified, by refusing to sell” any Miles products to Milgram.
Dietrich v. Cape Brewery & Ice Co.,
United States v. Colgate & Co.,
State ex inf. Hadley v. Standard Oil Co.,
Dietrich v. Cape Brewery & Ice Co., supra, 315 Mo. loc.cit. 520, 286 S.W. loc. cit. 43(11); State ex inf. Attorney General v. Arkansas Lumber Co., supra, 260 Mo. loc.cit. 306, 169 S.W. loc. cit. 174(20); Eastern States Retail Lumber Dealers’ Ass’n. v. United States,
Boston Store of Chicago v. American Graphophone Co.,
Morse v. Consolidated Underwriters,
State ex inf. Hadley v. Standard Oil Co., supra, 218 Mo. loc.cit. 416-417, 116 S.W. loc.cit. 1031; State ex inf. Crow v. Continental Tobacco Co.,
Co-operative Live Stock Commission Co. v. Browning,
See also Commissioner Limbaugh’s excellent and enlightening article on “Historic Origins of Anti-Trust Legislation,” 18 M.L.R. 215-248 (1953).
See also State ex rel. Kimbrell v. People’s Ice, Storage & Fuel Co., supra, 246 Mo. loc.cit. 221-222, 151 S.W. loc.cit. 118(25); United States v. Socony-Vacuum Oil Co.,
Under the Sherman Anti-Trust Act [15 U.S.C.A. Secs. 1-7], similar “in substance” to our anti-trust statutes [State ex Inf. Attorney General v Arkansas Lumber Co., supra, 260 Mo. loc.cit. 286-289, 169 S.Wi loc.cit. 168-169], resale price maintenance is illegal except where the Miller-Tydings Act [50 Stat. 693, 15 U.S.C.A. Sec. 1] is applicable. Schwegmann Bros. v. Calvert Distillers Corp.,
State ex rel. Taylor v. Anderson,
Section 416.070 provides that, in all proceedings for violation of -our anti-trust statutes, “proof of the acts of any person who has been acting as the ag'eht of such corporation in transacting its business in this state in- the name, behalf - or interest of such corporation shall be received as prima facie proof of the acts of the corporation' itself.”