83 N.Y.S. 271 | N.Y. App. Div. | 1903
Lead Opinion
The plaintiffs, who are the proprietors of what is called a department store in the city of New York, are engaged in connection with their retail business in ■ selling books and other publications, and as such complain of the action of the defendants and others in their endeavor to prevent them from purchasing and selling books without joining with these defendants in an agreement that all books sold by them.are to be sold at a net price to be fixed by. the publishers -of the books. They have asked for an injunction restraining the defendants from carrying on this combination or arrangement, which the complaint alleges has been- made between substantially all the publishers of books and those engaged in retailing books to the public; and they also-ask to recover the.damages sustained because of this combination' or arrangement which is alleged to be illegal and in violation of the laws of this State. The defendants demurred to the complaint upon. the ground that it does not state facts .sufficient to constitute a cause of action, which demurrers were sustained upon the decision of this court in Park & Sons Co. v. Nat. Druggists' Assn. (54 App. Div. 223; since affd. by the Court of Appeals, 175 N. Y. 1).
In determining the legality of the combination or arrangement here complained of, the test is whether the arrangement or' combination as alleged in the complaint is within the statutory- prohibition-. (Laws of 1899, chap. 690.) This statute is not referred to either in the opinion -of this court in the Park case or in the prevailing opinion of the Court of Appeals, for the reason, I suppose, that it was not in force when the arrangement or combination complained of was made, or when that-action was .commenced. It is referred to.incidentally by Judge Martin in his dissenting opinion in the Court of Appeals, but only as a declaration of the law of this State, which he considered was violated by the contract or combination which was alleged in that case.
In determining the question now before us, it is well first to con
Section 1 of the act (Laws of 1899, chap. 690), which in this respect is a re-enactment of section 1 of chapter 383, Laws of 1897, provides that “ every contract, agreement, arrangement or combination whereby a.monopoly in the manufacture, production or sale in this •State of any article or commodity of common use is or may be •created, established or maintained, or whereby competition in this State in the supply or price of any such article or commodity is or may be restrained or prevented, or whereby for the purpose of creating, establishing or maintaining a monopoly within this State of the manufacture, production or sale of any such article or commodity, the free pursuit in this State of any lawful business, trade or occupation is or may be restricted or prevented, is hereby declared to be against public policy, illegal and void.” Clearly the intent is to prohibit every arrangement or combination whereby the supply •or price of any article or commodity of common use may be fixed •or regulated by the agreement of those producing or dealing in such Article or commodity, or in any other way except by the free competition of the manufacturers and dealers in such article or commodity. Any agreement among manufacturers which limits the Amount which each is to manufacture would be an agreement whereby •competition in the supply of the articles covered by the contract may be restricted; and any contract, agreement, arrangement or combination among manufacturers which fixes the price at which articles should be sold by those who had become their owners by purchase from the manufacturers, would be a contract, agreement, arrange- . ment or combination by which competition in the price of such
This statute does not attempt to prevent the manufacturer of any article from" fixing any price at which he would. sell the rnanu- ■ factored article. It does not attempt to provide that, such a manu-facturer may not agree with a customer that the customer shall, not sell the article that he had purchased from the manufacturer- at •.a price less than that fixed by the manufacturer, or. that the manufacturer may not agree to give special facilities to the customer who- . lives up .to such'an agreement, and that was the question presented •in Walsh v. Dwight (40 App. Div- 513). But when an article thus, .manufactured has passed out of. the hands of toe manufacturer and ■ has come into the ownership of dealers engaged in general business, a combination between all manufacturers that any. dealer who pie:sumed to sell the article thus manufactured at a .price below that, at which the manufacturers had fixed as the retail price should thereafter be cut off from all opportunity to purchase articles of a similar character, is, it seems to me, a combination, which would tend to' •restrain the free sale of the article thus manufactured and sold, and would restrain or prevent competition in the price of the article. .What is declared.to be illegal is any contract, agreement, arrange- . ment or combination whereby competition in the supply or price of any article or. commodity of common use may be restrained "or prevented. If all the' manufacturers of flour in the United .■States should join in an agreement that'all flour must be sold'to-consumers at ten dollars per barrel, and .that any retailer who sold flour at a lower.price.should not.be allowed to purchase flour from ; any of those engaged in the combinationj or that any third party who sold to such-dealer any flour, no matter where he obtained it, ' could thereafter have no dealings with any member of the combination and purchase no flour from them, this would certainly be a .^combination or arrangement which would restrain competition in ■ the supply or price of flour, and would be illegal, Although each • manufacturer in the United States could agrée that he would not. sell, any flour manufactured by him at a less price than ten dollars, per barrel, when he attempts by combining with other manu.factur-r
In Matter of Davies (168 N. Y. 89) the Court of Appeals said in regard to this statute: “ Its object is to destroy monopolies in the manufacture, production and sale in this State of commodities in common use; to prevent combinations in restraint of competition in the supply or price of such commodities, or in restraint of the free pursuit of any lawful business, trade or occupation. The act in this respect is little more than a codification of the common law upon, the subject, and its validity, to this extent, is not and cannot be successfully questioned in view of a long line of authorities.” This being the effect of the statute, the question is, whether the combination entered into between these defendants is by the act declared to be against public policy, illegal and void. The complaint is quite voluminous, but a general statement of the nature of the combination alleged is sufficient for the determination of the question before us.
It is alleged that the defendant, the American Publishers’ Association, is a membership corporation, organized and existing under the laws of this State. The members of this association are the publishers of books, engaged in business in a number of the States of the United States and comprise ninety-five per cent of the publishers of books in the United States who published ninety-five per cent of all books published in the United States. There are made parties defendants in this action a large number of members of this corporation. Of these, eleven are corporations organized under the. laws of this State, eleven are copartnerships doing business within this State, and one is a foreign corporation. The purpose for which this corporation was organized is thus alleged: “ That during the
Does this combination or arrangement violate the provisions of this act which wé have before considered % It is alleged and admitted that the defendants who were the püblifehérs of-books, with-the intent to prevent competition in the sale of books, and for the purpose of establishing and maintaining the prices of all books published by them, or any of them, and all books dealt in by them, and preventing competition in the sale thereof, combined and associated themselves together, and to carry out that combination incorporated' the defendant, the American Publishers’ Association. Having thus secured a corporate franchise from the People of the State, the' members of this corporation organized a voluntary association- off those engaged as wholesale and retail' dealers in books, and have agreed.among themselves that any bookseller who attempts to sell-books which he has purchased -at a less price than that fixed by the publishers shall not be allowed to purchase any books, either' from the members of the corporation or from the members of the • voluntary association, or from any other dealer'in books, and háve: threatened that if any dealer in books- should. sell to such a book--.
• What is the object of this combination which includes the publishers and sellers of books? What is the effect of the corporate action of this corporation and of its members in carrying out the intent with which the combination (which- includes the formation of the corporation and the voluntary association) was formed ? Was not the nature and object of the combination to compel every dealer in books to fix the selling price of each book owned by him at the price designated by the publishers .of the books ? If that was the nature and object of the arrangement or combination, is it not clear that by- it competition in the price of books is or may be restrained or prevented ? I can conceive of but one answer to these questions. What competition in the price at which books are sold or retailed can exist if these defendants, constituting as they do ninety-five per cent of the publishers of books in the United States and Canada, can carry out the object and intent of. this combination ? For no bookseller who sells a book at a less price than that fixed by the publishers can obtain a book to sell. If lie sells a book at a less price than that fixed, the members of the association who' are the publishers of the book will sell him no. books. If he goes to a bookseller to purchase books and they sell him, the bookseller’s supply'is at once cut off. If this agreement could be carried out, all competition in the price of books would necessarily be at an end.
■ It is said, however, that as this arrangement related to copyrighted books which each publisher has a sole right to publish and sell, the agreement is merely carrying out their monopoly given by the Copyright Law (U. S. R. S. § 4952 et seq., as amd. by 26 U. S-Stat. at Large, 1107) and is not, therefore, a violation of the statute in question; but I do not understand that the Copyright Law gives to a publisher any right in the book when once it is published and sold. It is true that he has a right to sell as many copies as he pleases, but so he has the right to sell any other book he pleases
We have discussed this question without reference to any of the. cases upon this subject, relying solely, upon the language used in the statute, with the evident intent of the Legislature that passed, it, and having ascertained what was declared to be illegal, wé have-examined .the. provisions of the combination or arrangement as-alleged in relation to thé prohibition contained in the statute.. In none of the cases to which our attention has been called has the Court of Appeals defined just what contract or combination is w-ithifi the prohibition contained in this statute. The court at Special Term sustained this demurrer upon the ground, that the case of Park & Sons Co. v. Nat. Druggists' Assn, (supra) was controlling, but in that case the provisions of this statute were not considered, as the-combination therein complained of was formed long before the statute was enacted and the action itself was commenced prior to that-time. . .
In the Park case there was an interesting discussion as to. whether the combination in that case was void, at common law5 and the validity of that agreement was placed by a majority of the court,,as I read the opinions, upon the ground as stated-by. Judge Haight that the arrangement “ does not operate to restrict sales in any localities, but contemplates a ready method of distributing the goods;, throughout the entire country. It is, in effect, the creating of an: agency.on the part of the proprietors by which every druggist throughout -the United States may receive the goods and dispose of them as agents of the principal, receiving the commissions agreed-
It is not seriously disputed but that books are an article or commodity .of ■ common use^-and a further discussion of this question is-quite, unnecessary. We have the plain terms of the statute. We? have a combination expressly organized for an object which the-statute declares as against public policy, illegal and void. We have, the fact that such á combination or arrangement has been and is-being applied to prevent the plaintiffs from continuing their busi-. ness, and has caused them large damage for which they have no-adequate remedy at law; and it seems to follow'that, such a condition being admitted, the plaintiffs are entitled to some relief. In my view of the case the complaint stated a cause of" action and the-demurrer was improperly sustained.
The judgment should, therefore, be reversed, with costs, and the demurrers overruled, with costs, with leave to the defendants to withdraw demurrers and to answer, upon payment of costs of this, court and in the court below.
Pattebson and Laughlin, JJ., concurred; Van Bbunt, P. J.p and -McLaughlin, J., dissented.
Dissenting Opinion
■ The question here presented cannot be distinguished in principle-from the question presented in Park & Sons Co. v. Nat. Druggists' Assn. (54 App. Div. 223; affd., 175 N. Y. 1). . In that case the manufacturers, of certain proprietary articles entered .into "an agreement which, in effect, was to maintain the price put upon such articles by the respective manufacturers thereof. Here, the publishers of copyrighted books have entered into a similar agreement for the purpose of maintaining the price which the respective publishers put thereon. There is also an allegation in this complaint to the effect .that the agreement related to uncopyrighted as-well as copyrighted books, but as I read this complaint, I do not. think that allegation adds anything to the one relating to the copyrighted boobs, because there is ho allegation in it to the effect that the plaintiffs have by the act of the defendants been prevented from purchasing all the unco'pyrighted books which they desire from per
Applying, therefore, the principle laid down in the Parle case to the facts set out in the complaint, it necessarily follows, as it seems to me, that the judgment appealed from is right and must be -affirmed.
Concurrence Opinion
I concur with Mr. Justice McLaughlin. I do not see why a seller of property in respect to which he has a monopoly cannot impose any conditions as to its resale that he sees fit.
• Judgment reversed, with costs, and demurrers overruled, With costs, with leave to defendants to withdraw demurrers and to answer ■on payment of costs in this court and in the court below.