system of distributing and selling gasoline by "kerbpumps" unless the pump furnishers or lessors will agree that anybody's gasoline may be stored in and sold from pumps belonging to and furnished by a particular dealer. Martin Carey and Peter M. Speer, both of New York City, for Standard Oil Co., of N. Y.

Edwin B. Parker and James L. Nesbitt, both of New York City, for the Texas Co.

Adrien F. Busick and Eugene W. Burr, both of Washington, D. C., for Trade Commission.

HOUGH, Circuit Judge:

As the matter has not been argued, we have not referred to and will not dwell upon the pleadings put forth by the Commission, and assume, but not hold, that they comply with the rules suggested if not prescribed by Federal Trade Commission v. Gratz, 253 U. S. 427. In the language of the statute we think the "findings of the Commission as to the facts supported by testimony," so far as they go. But there are other facts thoroughly proven, admitted at bar, and aiding discussion.

Every pumping station is an advertisement; each bears the name of the oil producer whose gasoline is supplied therefrom, if the retailer honestly observed his bargain. The system is a great convenience to the public; it has increased enormously the ease with which motor drivers may obtain "gas" even in remote and thinly settled districts. It is the only method known or suggested, of keeping before the consuming public the oil manufacturers' trademark, and it has largely succeeded the system of distributing oil in barrels, which barrels bore the maker's trademark and were practically loaned to the vendees, to be returned empty.

The choice between owning and leasing pumps depends upon the extent of the retailer's business and the amount of his capital. The majority of small dealers have small capital, and therefore lease rather than buy. It is perfectly possible to buy from the same manufacturers who supply to the oil dealers the pumps leased by the latter. The competition between the various oilselling persons and corporations is and has been very keen; each is desirous of extending the sale of his own brand, and the system of leased pumps each bearing the trade-mark or trade name of its lessor is regarded by many, though not all, wholesalers as a profitable form of advertisement. There is no agreement, combination, or arrangement between the various wholesale lessors as to parceling out territory or abstaining from supplying pumps to a community already supplied by another wholesaler.

88097-22-13

By these facts three questions of law are presented: (1) Is the system outlined an "unfair method of competition in commerce,' the prevention of which would be "to the interest of the public"? (Sec. 5, Trade Commission Act, 38 Stat. 719.)

(2) Is the above-stated method of leasing unlawful under section 3 of the Clayton Act, whereof the language here important is noted in the margin.1

(3) Does the business here involved amount to interstate commerce?

Whatever may be the exact meaning or extreme scope of the still novel phrase "unfair method of competition," it is settled that it is for the courts and not the Commission to determine as matter of law what is and what is not included in the phrase. (Federal, etc., Commission v. Gratz, supra.) And this rule is not avoided by stating as a finding of fact what is a mere conclusion of law. (New Jersey, etc., Co. v. Trade Commission, 264 Fed. 509.)

The Commission justifies the order complained of by looking to the future rather than at the present, a position summed up in argument as follows:

The loaning practice restrains competition and tends toward monopoly, for the reason that it destroys the freedom of solicitation for business which the oil distributor would otherwise have. The gratuity which the practice confers removes the opportunity for competition because it ties tens of thousands of individual retailers to the oildistributing corporations which engage them.

The Commission looking forward sees in the present highly competitive business of the various wholesalers a seed which will in time produce the fruit condemned in Patterson v. United States, 222 Fed. 599, where the court held:

For one competitor to exclude all or substantially all competitors from such opportunity, i. e., drive them from the field of freely offering their goods so as to have that field to himself is to monopolize according to the legal and accurate sense of the word.

Applied to the present case, this means and is admitted to mean that since most retailers do a small business they need only one pumping device; wherefore the first wholesaler who furnishes a free pump has monopolized the business of that retailer and so unfairly competed with all other wholesale dealers.

We think this reasoning confounds commerce with convenience, besides introducing into trade an element of unfairness and indeed dishonesty. There is no contract, agreement, or understanding by which any retailer is prevented from selling any brand of oil, and he can own or lease as many pumps as he likes or can use.

It shall be unlawful for any person engaged in commerce in the course of such com* * machinery * ** merce to lease * or other commodities * * * for use * * * on the condition * * *that the lessee *** shall not use or deal in the ** of a competitor * * goods * * of the lessor, * * * where the effect of such lease * ** may be to substantially lessen competition or tend to create a monopoly in any line of commerce. (38 Stat. 731.)

It is unfair and dishonest to give out from a pump bearing one brand another maker's oil, and all that secures any one retailer's trade for any one wholesaler is the amount of business the retailer can gather from the community.

It is possible, when any system of distributing an article of prime necessity and enormous consumption is well established, that temptation arises for competing distributors to enter into treaties regulating prices, classifying customers, or dividing the area supplied into spheres of influence one sphere for each distributor.

It may be admitted that one function of the Trade Commission is to discern and suppress such practices in their beginning; but a thing exists from its beginning, and it is not a conclusion of law from any facts here found that a system which at present is keenly competitive, extremely advantageous to the public, and, in the opinion of a majority of the competent witnesses economical, is at present unfair to anyone or unfair because tending to monopoly. A tendency is an inference from proven facts, and an inference from the facts as found by the Commission is a question of law for the court. As a matter of law there is at present no violation of the trade commission statute; therefore the first of respondent's contentions cannot be sustained. For substantially the same reason the leases of these petitioners do not violate section 3 of the Clayton Act; i. e., the effect of their leases is not "to substantially lessen competition or tend to create a monopoly in any line of commerce.' We note Coca-Cola Co. v. Butler, 229 Fed. 224, as containing a valuable commentary on this section of the Clayton Act; and the facts of that case are suggestive of the advantages to the public in being reasonably able to rely upon getting the 'gas" he pays for out of any trade-marked pump.

It is of course true that if the trade or business under consideration is not interstate commerce the Commission had no jurisdiction. We express no opinion on this point; but because as matter of law no unfair method of competition has been shown and no violation of the Clayton Act, the orders complained of are reversed

FRUIT GROWERS' EXPRESS INCORPORATED v. FEDERAL TRADE COMMISSION.*

(Circuit Court of Appeals, Seventh Circuit. June 16, 1921.)

No. 2857.

1. MONOPOLIES KEY NO. 24 (2)-RAILROADS HELD NECESSARY PARTIES TO ANNUL EXCLUSIVE PROVISION IN CONTRACTS BETWEEN THEM AND A CAR COMPANY.

Under contracts between railroad companies and a car company providing that the car company would furnish refrigerator cars for a fruit crop and furnish men, icing stations, and ice to keep the cars iced, etc., and that the railroad companies would take all their refrigerator cars from the car company and pay icing charges and the usual mileage charge, the destruction of the exclusive clause would destroy the mutuality of the contract and render it unenforceable, and the railroad companies were necessary parties to a proceeding to annul it, as in violation of Clayton Act, paragraph 3 (Comp. St., par. 8835c).

2. MONOPOLIES KEY NO. 24 (1)—FEDERAL TRADE COMMISSION WITHOUT JURISDICTION OF PROCEEDING TO ANNUL EXCLUSIVE PROVISION OF CONTRACTS BETWEEN RAILROAD COMPANIES AND CAR COMPANY; "WHERE APPLICABLE TO COMMON CARRIERS."

Clayton Act, paragraph 11 (Comp. St., par. 8835j), conferring authority to enforce compliance with certain sections, including section 3 (Comp. St., par. 8835c), on the Interstate Commerce Commission "where applicable to common carriers," gives exclusive jurisdiction to the Interstate Commerce Commission where the facts involve common carriers or the business of common carriers, and the Federal Trade Commission is therefore without jurisdiction to require a car company to cease and desist from using or enforcing a provision in contracts with railroad companies requiring them to take all their refrigerator cars for a fruit crop from it.

(The syllabus is taken from 274 Fed. 205.)

Petition by the Fruit Growers' Express Incorporated to review an order of the Federal Trade Commission. Order annulled and set aside.

R. F. Feagans, of Chicago, Ill., for petitioner.

E. C. Alvord, of Washington, D. C., for respondent. Before Baker, Evans, and Page, circuit judges.

*Reviewing order of the Commission in Federal Trade Commission v. Fruit Growers' Express, 2 F. T. C., 369. Petition by the Commission for writ of certiorari in this case was granted by the Supreme Court on October 24, 1921.

FRUIT GROWERS' EXPRESS, INC., VS. FEDERAL TRADE COMMISSION. 191

PAGE, Circuit Judge:

This is an original petition filed in this court under the provisions of section 11 of the act of October 15, 1914 (38 U. S. Stats. at L., p. 730), commonly known as the Clayton Act, to obtain a review of an order to cease and desist, entered by the Federal Trade Commission (here known as respondent) against Fruit Growers' Express (here known as petitioner).

In 1919 respondent filed its complaint charging that petitioner had made a contract with certain railroads containing the following clause, alleged to be in violation of section 3 of the Clayton Act:

The railroad shall use the car line's equipment exclusively in the movement of fruits and vegetables under refrigeration in carloads from points on the lines of railway owned or operated by the railroad during the life of this contract.

A motion to dismiss was denied, and petitioner answered, admitting the correctness of the above quotation, but saying that the exclusive clause was made in consideration of and depended upon other covenants on the part of petitioner. The answer also denied the alleged violation of the Clayton Act, jurisdiction in respondent, and urged the absence of necessary parties.

By the contract, the car company was to do the following things: Furnish, to be parked and distributed, required number of suitable refrigerator cars to carry all fruit tendered; furnish men, icing stations and ice, to keep cars iced to destination; keep cars in good repair; load and strip cars and furnish additional refrigeration under stated condition; furnish cars for points on foreign lines; hold itself accountable for failure to furnish cars required, properly iced, and for improper or faulty condition of the cars; keep an inspector at South Rocky

Mount.

After a hearing, respondent made findings of fact from which it reached and expressed the following conclusion with reference to the exclusive clause in the contract: The effect of such condition,

*
*

* may be to substantially lessen competition and tend to create a monopoly in the transportation of fresh fruits and vegetables under refrigeration in the territory served by the several lines of railroad mentioned * * and that the use of such conditions is in violation of section 3 of an act of Congress approved October 15, 1914.

*

Thereupon respondent entered the order here complained of, which was, in substance, that petitioner cease and desist from making any new contract containing that exclusive clause and from enforcing it in existing contracts.

Authority to enforce compliance with section 3 of the Clayton Act is vested by section 11 thereof in the Interstate Commerce Commission where applicable to common carriers, in the Federal Reserve Board where applicable to banks, banking associations and trust companies,