sold to others who cut prices on copyrighted books;1 the sending of lists to manufacturers, and, on request, the furnishing to manufacturers of information as to the standing of applicants for the privilege of buying direct from manufacturers; 2 and the distribution of an "official list" among the members of retail dealers' association containing the names of wholesalers who had solicited, quoted, or sold directly to consumers of lumber.3

Association activities enjoined under consent decree in suits brought for violations of the Sherman Antitrust Act may be here stated as follows: The members of a wholesale jewelers' association and of a manufacturing jewelers' association were enjoined from agreeing not to purchase from manufacturers of jewelry who sold to jobbers not recognized by the association, or to retailers, or to any person desiring to purchase, or from preventing sales between any persons whomsover desiring to buy or sell jewelry. They were also enjoined from boycotting, threatening, intimidating, whitelisting, or blacklisting any of the classes of persons contemplated by the decree, or from trying to induce manufacturers not to sell to any person.* A plumbers' supply association was enjoined from publishing lists of members for the purpose of preventing sales by manufacturers to nonmembers, or lists of manufacturers who agreed to sell only to

1 This agreement by all members of a publishers' association controlling 90 per cent of the book business in the country was held to be an agreement relating to interstate trade or commerce within the antitrust act (act of July 2, 1890, chap. 647, 26 Stat., 209). A black list was kept, containing the names of those who cut prices on copyrighted books and those who sold to price cutters, and no one on the black list could buy any books of anybody in the scheme. It was held that such scheme constituted a conspiracy in restraint of interstate trade or commerce. The rights acquired by publishers of copyrighted books under the copyright law did not justify them in combining and agreeing that their books should be subject to the rules laid down by the united owners, one of which was that no member of the association should sell any books to a blacklisted purchaser who was known to cut prices. Mines v. Scribner, 147 Fed., 927 (1906). A somewhat similar case is found in Straus v. American Publishers' Assn., 231 U. S., 222 (1913).

2 Held, that these acts constituted a violation of the decree, since, considered in connection with the former policy of coercion, they constituted a deliberate utilization by the association of the influence over the manufacturers which its previous policy had gained for it, especially where subsequent to the decree it mailed to manufacturers a circular stating that it would continue to issue the "Green Book" [containing lists of exclusive wholesale grocers, and used as a means of compelling manufacturers to confine their sales to those whose names appeared on the list]. This circular stated that none of its methods, rules of practice, or activities would be affected by the decree. Difficulty was experienced in the direct buying from certain manufacturers supplied with lists unless the buyer's name appeared on the lists, and a general impression prevailed that listing was essential to direct-buying privileges. (United States r. Southern Wholesale Grocers' Assn. et al., 207 Fed., 434.)

3 The United States Supreme Court held that the circulation of this report "tended to prevent members of the association from dealing with the listed dealers referred to in the report, and to directly and unreasonably restrain trade by preventing it with such listed dealers, and was within the prohibitions of the Sherman Law"; and that "while a retail dealer may unquestionably stop dealing with a wholesaler for any reason sufficient to himself, he and other dealers may not combine and agree that none of them will deal with such wholesaler without, in case interstate commerce is involved, violating the Sherman Law." Eastern States Lumber Dealers' Assn. v. United States, 234 U. S., 600 (1914).

4 Consent decree in United States v. National Wholesale Jewelers' Assn. (1914).

members, or lists of nonmembers, and from boycotting manufacturers for having sold to nonmembers, and from preventing jobbers from engaging in business; or from engaging in any agreement which restricts the "free and unrestrained" flow of commerce.1 The decree in the Southern Wholesale Grocers' case (above referred to) enjoined members from combining or conspiring to prevent manufacturers from selling to nonmembers, from publishing a white list, from coercing manufacturers into refusing to sell to price cutters, and from boycotting manufacturers for having sold to nonmembers. The members of the Philadelphia Jobbing Confectioners' Association were likewise enjoined from conspiring to withhold their patronage from any manufacturer for having sold to nonmembers, or from conspiring to prevent manufacturers from selling freely in the open market, or from publishing white lists of members of the association for the purpose of influencing manufacturers not to sell to nonmembers, and from conspiring to induce manufacturers not to sell to retailers or jobbers who were not members of the association. Certain manufacturers were enjoined from entering into any agreement or understanding with each other or with the National Association of Retail Druggists or the National Wholesale Druggists' Association in refusing to sell, or from discriminating in sales, to persons whose names appeared on any list of persons purporting to adhere or not to adhere to their contracts, or to maintain or refuse to maintain prices, and from blacklisting manufacturers and wholesale contract proprietors. The members of the "Association of Coaster Brake Licensees," an association of owners of patent rights relating to coaster brakes, were bound under patent and license contracts to maintain uniform and noncompetitive prices and resale prices. The agreement also covered certain other unpatented parts of bicycles and motorcycles. The association sought to prevent, among other things, sales to manufacturers, jobbers, and dealers, who were not listed by the joint action of members. By consent decree the defendants were enjoined from soliciting, making up, ratifying, or confirming any lists of manufacturers, or jobbers, or dealers, with whom trade should or should not be carried on.*

Section 24. Limitation of output.

As noted in the first part of this chapter, agreement to control prices by curtailing output is frequently found in particular combinations, but not primarily as an association activity. This is borne out by an examination of the decisions, many of which condemn this

1 Consent decree in United States v. Pacific Coast Plumbers' Supply Assn. et al. (1912). 2 Consent decree, United States v. Philadelphia Jobbing Confectioners' Association (1913).

$ Consent decree, United States v. National Association of Retail Druggists (1907). 4 Consent decree, United States v. New Departure Mfg. Co. (1913).

method of control but few of which involve activities of associations having any degree of formal organization. In one case the Missouri Supreme Court found that members of the Yellow Pine Manufacturers' Association had violated the Missouri antitrust laws,1 by curtailing output under agreement and through concerted action." The court suspended a writ of ouster upon certain conditions which included the filing of affidavits declaring that respondents would not be parties to any agreement or understanding to control the production of lumber.

Likewise, a Federal court condemned, as in violation of the Sherman Antitrust Act, an agreement to restrict the output of shingles manufactured in the State of Washington and sold and used principally in other States.3

Section 25. Allotment of customers and division of territory.

What has been said of the "limitation of output" is also true of the practice of allotting designated customers to specified persons, namely, this is more frequently a purpose of particular combinations than of such associations as are considered in this chapter. However, when such purposes are involved in trade-association cases they have been judicially condemned. Thus, in reaching the conclusion that the purpose of a certain printers' club was to create a monopoly and stifle competition, the Supreme Court of Georgia considered, among other things, an allegation charging the establishment of a system whereby the manager of a printers' club notified members, each in his turn, to secure contracts as they were asked for by the city of Atlanta, while other members refrained from submitting bids or submitted them in such a manner that the contract would be awarded according to a prearranged plan; and that in furtherance of this system a member who disregarded it was fined and notified that the right to name future prices for printing would "irrevocably revert " to the other members of the club.1

Division of territory is closely, but not inseparably, connected with allotment of customers, as the latter may be accomplished without reference to location. One form of dividing territory among speci

1 Missouri Rev. Stats., 1909, sec. 10299 et seq.

2 State ex inf. Atty. Gen. v. Arkansas Lumber Co. et al., 169 S. W., 145 (1914).

3 The Washington Red Cedar Shingle Manufacturers' Association, unincorporated, composed of manufacturers of red-cedar shingles and dealers handling the same, and having for its object the prevention of injurious competition, was charged with having restricted the output of shingles, as above noted, and with having established prices of shingles below which members were not allowed to sell. Held, a combination in restraint of interstate trade and unlawful under the Sherman Antitrust Act. Gibbs v. McNeeley, 102 Fed., 594 (1900); 107 Fed., 210 (1901); 118 Fed., 120 (1902).

Employing Printers' Club et al. v. Dr. Blosser Co., 122 Ga., 509 (1905). See also Leonard v. Abner-Drury Brewing Co., 25 App. D. C., 179 (1905), where the court condemned an attempt by a brewers' association and others to compel a nonmember to join the association in order that its regulations looking to an advance in the price of beer and the allotment of customers might be enforced.

fied dealers quite common to association purposes is found in attempts to prevent sales by others in territory supplied by any member. Of the decisions previously treated in this chapter, one of early date, rendered by a State supreme court, and a later one by a Federal court,2 indicated that association activities of this nature were formerly permissible. Other decisions, and especially those of recent date, however, quite generally condemn them.

Section 26. Means of accomplishing association purposes.

Since the legality of the means adopted has been noted in connection with the four purposes already treated, it is sufficient here to treat this phase of the subject in a general way only. Probably the means most frequently used to enforce commercial relations sought to be established by trade associations is the boycott, and the most common form of boycott is the actual or threatened withdrawal of patronage. While some of the earlier decisions at common law seem to have held this to be a legitimate means of enforcing associations rules,3 the weight of authority, at common law and numerous statutes, condemn such actions as unlawful.*

In the cases herein treated the usual method of effecting boycotts was to circulate periodically a printed list containing the names of those who had violated association regulations, or to convey similar information by letter, or to effect the same result by publishing a list limited to names of those with whom members were permitted to deal. The first two methods are known as blacklisting and the last as whitelisting. Various specific names, such as Blue Book, Red List, Bad-Pay List, etc., have been given to lists of this nature or to similar expedients.

The successful accomplishment of the four purposes above treated— (1) price control, (2) prevention of sales, (3) limitation of output, and (4) allotment of customers and division of territory-have depended largely upon the exercise of restraint, sometimes confined to the members but usually applied also to nonmembers; and

1 Bohn Manufacturing Co. v. Hollis, 54 Minn., 223 (1893).

2 Montgomery Ward & Co. v. South Dakota Merchants & Hardware Dealers' Association, 150 Fed., 413 (C. C., 1907).

3 Bohn Mfg. Co. v. Hollis et al., 54 Minn., 223 (1893); Montgomery Ward & Co. v. South Dakota Retail Merchants & Hardware Dealers' Association, 150 Fed., 413 (1907); Macauley Bros. v. Tierney et al., 19 R. I., 255 (1895).

4 Brown & Allen et al., v. Jacobs Pharmacy Co., 115 Ga., 429 (1902); Klingel's Pharmacy v. Sharp & Dohme et al., 104 Md., 218 (1906); Employing Printers' Club et al. v. Dr. Blosser Co., 122 Ga., 509 (1905); Funck v. Farmers' Elevator Co. of Gowrie et al., 142 Iowa, 621 (1909). See also Continental Insurance Co. v. Board of Fire Underwriters, 67 Fed., 310 (1895); Purington v. Hinchcliff, 120 Ill. App., 523, affirmed 219 Ill., 159 (1905); Downes et al. v. Bennett et al., 63 Kans., 653 (1901); Olive & Sternenberg v. Van Patten, 7 Tex. Civ. App., 630 (1894); Park & Sons Co. v. National Wholesale Druggists' Association et al., 50 N. Y. Supp., 1060 (1896); Straus v. American Publishers' Association, 177 N. Y., 473 (1904); Walsh v. Association of Master Plumbers, 97 Mo. App., 280 (1902); Retail Lumber Dealers' Association v. State of Miss., 95 Miss., 337 (1909); Cleland v. Anderson, 66 Nebr., 252 (1902):

while the decisions considered as a whole are not in accord, yet it fairly may be concluded that boycotting for the most part, under most circumstances, is illegal. There is, however, a fifth class of purposes (designated below as "mutual protection against delinquent debtors"), usually enforced by a species of boycott, which, in the absence of statutory prohibition, has in many instances escaped judicial condemnation.

Section 27. Mutual protection against delinquent debtors.

Blacklists in the form of bad-pay lists, cash-before-delivery lists, abstracts of unsettled accounts, lists of delinquent debtors, and the like, adopted by trade associations to lessen credit risks by the interchange among members of accurate information concerning the financial standing of their customers, are usually held to give no ground of action at law for damages to the retail dealer or private citizen who thereby suffers a loss of credit. And this is true even where the constitutions or by-laws of the associations forbid the members, under penalty of fine or expulsion, to extend further credit to the person reported as long as his name remains on the delinquent list. In some cases there has been a refusal to give relief even where the regulations forbid members to sell for cash to the debtor until he has settled the claim for which he has been listed.

The party whose business or credit has been thus curtailed or destroyed can not ordinarily succeed in an action for libel. Proof of the statement published is, in the absence of special statutes, a good defense to such an action. And where the members can show such a common interest to protect as to render the statement qualifiedly privileged, the aggrieved party, in order to succeed, must show not only that the statement is false but also that it was made with express malice.1 As to the degree of common interest necessary to establish a privilege, however, the decisions are not in harmony, and in some of them the effect of the privilege seems to be either denied or disregarded. Where all dealings by the members with the debtor, for cash as well as on credit, are prohibited until his claim is settled, there is a tendency to recognize an element of coercion that is repugnant to

1 Reynolds v. Plumbers' Material Protective Association, 63 N. Y. Supp., 303 (1900); affirmed by Court of Appeals, 169 N. Y., 614 (1902); Trapp v. Dubois, 78 N. Y. Supp., 505 (1902); Weston v. Barnicoat, 175 Mass., 454 (1900); McIntyre v. Weinert, 195 Pa., 52 (1900); Ulery v. Chicago Live Stock Exchange, 54 Ill. App., 233 (1894); White v. Parks, 93 Ga., 633 (1894), 20 S. E., 78.

2 Muetze v. Tuteur, 77 Wis., 236 (1890); Woodhouse v. Powles, 43 Wash., 617 (1906); Denney v. Northwest Credit Association, 55 Wash., 331 (1909), 104 Pac., 769; Western Union Telegraph Co. v. Pritchett, 108 Ga., 411 (1899); Werner v. Vogeli, 10 Kans. App., 536 (1901); Cleveland Retail Grocers Association v. Exton, 18 Ohio Circuit Court, 321 (1899); Windisch-Muhlhauser Brewing Co. v. Bacom, 21 Ky. L. R., 928 (1899); John Brenner Brewing Co. v. McGill, 23 Ky. L. R., 212 (1901); Nettles v. Somervell, 6 Tex. Civ. App., 627 (1894).