of its members: The National Association of Retail Druggists was also enjoined from issuing or aiding in any way in the publication of Ests or other documents purporting to contain the names of persens adhering or not adhering to their contracts, or maintaining or refusing to maintain prices, from securing or aiding in securing the adoption of any schedule for the sale of drugs, etc., by the retail dealers of any market to the consumers of said market, and from enforcing the maintenance of any such schedule; and all such lists. documents, schedules, contracts, agreements, and understandings were declared unlawful and ordered recalled.2 Section 23. Prevention of sales. The prevention of sales to consumers and others is one of the methods of fixing the channels of trade, above referred to, which, in the more recent cases, has been repeatedly condemned by the courts. Trade associations early sought to accomplish this purpose by adopting by-laws or constitutions designed to prohibit members from dealing with manufacturers or wholesalers who sold to consumers, or who sold to such brokers or dealers as were regarded by the association as not entitled to purchase commodities at wholesale prices Transactions of this nature were penalized by requiring offending manufacturers and wholesalers to pay a commission to the dealers in whose territory such sales were made. Refusals to comply with sut demands were to be met with concerted withdrawals of patronage While one or two early decisions 3 seemed to have upheld the legality of by-laws or agreements of this character, the weight of authority is decidedly against them. Decisions condemning the performance of association agreements of this character hold that damages resulting therefrom are recov erable, or, in a proper case, their future performance may be restrained by injunction. Thus, where a manufacturer was compelled by a retail lumber dealers' association to pay a penalty for selling lumber to a consumer through a broker in territory supplied by a member of a retail dealers' association, and, as a consequence of such fine, thereafter refused to sell to the broker; held, that the latter con!. recover damages from the association member who had compelled the payment of the penalty, and that an injunction should issue restraining the defendants from demanding a penalty under the bylaws from anyone who sold to the broker, or through the broker to the consumer, and from interfering with the broker's business in ant way other than by fair, open competition. So, also, where a firm of 1 United States v. New Departure Mfg. Co. (1913). 2 United States v. National Assn. of Retail Druggists (1907). 3 Bohn Manufacturing Co. r. Hollis, 54 Minn., 223 (1893); also Montgomery Ward à Co. v. South Dakota Merchants & Hardware Dealers' Association, 150 Fed., 413 (C. c. • Jackson v. Stanfield et al., 137 Ind., 592 (1894). manufacturers suffered a loss of business as a result of a letter circulated by a retail dealers' association notifying members of sales made to consumers by, and requesting them not to deal with, the firm of manufacturers, such letter having been sent presumably as a consequence of by-laws which made it the duty of members to discontinue purchasing from manufacturers or wholesalers who sold to consumers, the Texas Court of Civil Appeals held that said manufacturers could recover damages from members of the association, that members had no right to prevent the manufacturer from selling to consumers, and, further, that such interference with his business served no legitimate purpose connected with their own. Likewise the Iowa Supreme Court denounced as unlawful an agreement among retail dealers to prevent farmers' cooperative companies from securing supplies by coercing wholesalers and jobbers in the matter of refusing to sell. So, also, an Iowa district court in the same year granted an injunction restraining the members of the Iowa Implement Dealers' Association from "in any manner whatever interfering with the business of the plaintiff, from preventing or attempting to prevent any jobber, wholesaler, or vender of farm implements * * from * selling to the plaintiff" company.3 Agreements among the members of associations of retail dealers not to deal with manufacturers or wholesalers who sold to consumers in territory supplied by any of the parties to the agreement have, in a number of cases, been held to violate State statutes prohibiting combinations to restrain trade or to hinder or lessen competition. Thus, where the constitution of an association of retail lumbermen provided that the members, upon notice by the secretary, should discontinue purchasing from any manufacturer or wholesaler who had sold to a consumer, the Supreme Court of Mississippi held the association to be a combination in violation of the State statute. This statute prohibits combinations "intended to hinder competition in the sale or purchase of a commodity."5 Where it clearly * ** 1 Olive & Sternenburg v. Van Patten et al., 7 Tex. Civ. App., 630 (1894). 2 Funck v. Farmers' Elevator Co., of Gowrie, et al., 142 Iowa, 621 (1909). Unreported 3 Farmers' Elevator Co. v. Iowa Implement Dealers' Association et al. decision of Wright, J., in the district court of Webster County, Iowa, September term, 1909. * Mississippi Code, 1906, sec. 5002. * Retail Lumber Dealers' Assn. v. Mississippi, 95 Miss., 337 (1909). This case was appealed to the Supreme Court of the United States, where it was held that the State statute did not violate the Federal Constitution. In discussing the nature of the agreements prohibited by the act, the Supreme Court said: they have agreed not to deal with anyone who makes sales to consumers, which sales might have been made by any one of the 77 independent members of the association. Thus they have stripped themselves of all freedom of contract in order to compel those against whom they have combined to elect between their combined trade and that of consumers. That such an agreement is one in restraint of trade is undeniable, whatever the motive or necessity which has induced the compact. Whether It would be an illegal restraint at common law is not now for our determination." (Grenada Lumber Co. v. Mississippi, 217 U. S., 433 (1910). appeared mas me if the injerts of a similar association was to preTeng nanlÉMtlers and viciesters from selling to consumers, and the eastsition and by-avs provided for a penalty to be collected from manniwmarers or viciesters who made such sales, the Supreme Cour of Necesita best fitas se propose was clearly in contraventom of a State samtel winch proditized any combination of dealers Intended to prevent others from wedding or carrying on the ane bostess.” e vijá tended to prevent or preclude a free and restrained competition among themselves or others or the people gecemily. The action of an association of retail lumber dealers in preventing manufacturers and wholesalers from making sales to oncatimers was also beli in a subsequent Nebraska decision, to be in violation of the State antitrust laws In this case the secretary took up complaints of members in a manner which left no doubt in the minds of offending wholesalers or dealers that such sales were displeasing. This, apparently, in the opinion of the court, carried the implied threat of the withdrawal of patronage.* The cases just treated involve the prevention of sales to consumers, while the following cases involve efforts to prevent sales to objectionable dealers. The common-law decisions in these, as in the abovecited cases, are not in accord. Thus, a leading decision in Rhode Island denied an injunction to restrain members of an association of master plumbers from notifying dealers in plumbers' supplies that the association members were withdrawing their patronage and would continue to do so unless said dealers refrained from selling the commodities in which they dealt to certain master plumbers who were not members of said association; and where an association of dealers engaged in buying and selling cattle adopted a by-law prohibiting its members from dealing with any trader not a member of the association, or with anyone who dealt with nonmembers, it was held that those outside the association, being only incidentally affected. had no standing in a court of equity to restrain the enforcement of such by-laws." Taking a decidedly opposite view, the Supreme Court of Tennessee declared obnoxious to the common law a by-law which prohibited members of an association of master plumbers from purchasing from any manufacturer or dealer who did not comply with the rules of the association, or from any jobber who purchased from a manufacturer who sold to master plumbers who were not members of the association. In another case the Supreme Court of Wisconsin held 1 Cobbey's Annotated Stats., sec. 11510; Comp. St. 1901, ch. 91a, sec. 11. Nebraska Laws, 1905, ch. 162; Comp. St., 1901, ch. 91a. on demurrer that an action for damages would lie against the parties to an agreement, in favor of a retailer whose business had been destroyed as the result of the performance of the agreement, between wholesale coal dealers and certain retail dealers, binding the former to sell coal to the latter only. This agreement was made for the purpose, among others, of forcing out of business all retail dealers not parties thereto.1 The action of associations in similarly preventing sales to nonmembers has also been held in violation of State antitrust laws.2 The stifling or elimination of competition by prohibiting or unduly influencing mine owners, manufacturers, wholesale dealers, or others, to refuse or to desist from selling to nonmembers, to consumers, to so-called "objectionable" dealers, or to others has been at issue in a number of cases involving interpretation of the Sherman Antitrust Act. Briefly stated, the judicial decisions in the cases herein selected under the Sherman Act covering this class of association activities condemned the following: A written agreement among members, binding them under penalty not to sell in a certain city, coal imported from another State, except to members; an agreement binding members not to purchase materials from manufacturers located in other States, who were not members, and not to sell unset tiles to nonmembers, except at 50 per cent more than the price charged members; an agreement prohibiting members from selling books to anyone who cut prices or to anyone who should be known to have 1 Hawarden r. The Youghiogheny & Lehigh Coal Co., 111 Wis., 545 (1901). Nebraska Comp. St., 1901, chap. 91a. See Cleland v. Anderson, 66 Nebr., 252 (1902), and State r. Adams Lumber Co., 81 Nebr., 392 (1908). For violations of Missouri statutes see State v. Arkansas Lumber Co., 169 S. W., 145, 179 (1913): Walsh r. Association of Master Plumbers, 97 Mo. App., 280 (1902). For violation of Michigan laws (Mich. Public Acts, 1899; act No. 255, sec. 1) see Hunt v. Riverside Cooperative Club, 104 N. W., 40, Supreme Court of Michigan (1905). 3 The "Nashville Coal Exchange," composed of a number of companies mining coal in Kentucky and Tennessee and a number of coal dealers in Nashville, Tenn., was formed for the purpose of regulating the price of coal at Nashville. Its members agreed not to ship coal to Nashville or to sell coal therein except to members, and, under penalty of fine, also agreed not to sell except at prices established by the exchange or association. This was held to be in violation of the act of July 2, 1890, and the members were enjoined from further violations of that act. United States v. Jellico Mountain Coal Co., 46 Fed., 432 (1891). A substantially identical case is found in United States v. Coal Dealers' Assn., 85 Fed., 252 (1898). In an action for treble damages against an unincorporated association of wholesale dealers residing in California, having as nonresident members manufacturers in other States, held that although the sales of unset tiles were within the State of California, and although such sales constituted a very small portion of the trade involved, agreement of manufacturers without the State not to sell to anyone but members was part of a scheme which included the enhancement of the price of unset tiles by the dealers within the State, and that the whole thing was so bound together that the transactions within the State were inseparable and became a part of a purpose which, when carried out, amounted to and was a combination in restraint of interstate trade and commerce. Montague & Co. v. Lowry, 193 U. S., 38 (1904). wild to others who mo proms te ngarighted books: the sending of lists :: manirrers, and ce repest, the furnishing to manufacputers of informatie is in the standing of applicants for the privilege of baraz tres from carers: and the distribution of dalar the members of retail dealers' association encuining the cames of wholesalers who had solicited. quoted, or wild drwenly to masters of lumber Association activities enjoined under consent decree in suits bronzia for violations of the Sherman Antitrust Act may be here stated as follows: The members of a wholesale jewelers' association ani of a manufacturing jewelers association were enjoined from agreeing not to punchie 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 est 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., 20th 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 conspira 7 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 r. Scribner, 147 Fed, 927 (1906) A somewhat similar case is found in Straus r. American Publishers' Assn., 231 U 8, 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 decre 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 prevalled that listing was essential to direct-buying privileges. (United States r. Southern Wholesale Grocers' Assn. et al., 207 Fed., 434.) 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 nor of them will deal with such wholesaler without, in case interstate commerce is involved violating the Sherman Law." Eastern States Lumber Dealers' Assn. r. United States, 234 . 8, 600 (1914). Consent decree in United States r. National Wholesale Jewelers' Assn (1914). |