274 U.S. 160
FEDERAL TRADE COMMISSION et al.
CLAIRE FURNACE CO. et al.
Reargued Nov. 24, 1925.
Decided April 18, 1927.[ Federal Trade Commission v. Claire
Furnace Co. 274 U.S. 160 (1927) ]
[274 U.S. 160, 162] The Attorney General and Mr. W. D. Mitchell, Sol. Gen., of Washington, D. C., for appellants. [274 U.S. 160, 163] Messrs. Paul D. Cravath, of New York City, and W. D. Stewart, of Pittsburgh, Pa., for appellees.
Mr. Chief Justice TAFT delivered the opinion of the Court.
This was a bill in equity, brought in the Supreme Court of the District of Columbia on behalf of 22 companies of Ohio, Pennsylvania. West Virginia, New York, Delaware, New Jersey, and Maryland, in the coal, steel, and related industries, to enjoin the Federal Trade Commission from enforcing or attempting to enforce orders issued by that Commission against the complainant com- [274 U.S. 160, 166] panies, requiring them to furnish monthly reports of the cost of production, balance sheets and other voluminous information in detail upon a large variety of subjects relating to the business in which complainant corporations are engaged. The authority under which the Commission professed to act was expressed in the following resolution adopted by the Commission December 15, 1919:
[274 U.S. 160, 167] 'Resolved, that such action be started as soon as possible with respect to the coal industry and the steel industry, including in the latter closely related industries such as the iron ore, coke, and pig iron industries.'
Purporting to proceed under this resolution, the Commission served separate notices upon the 22 appellees and many other corporations, engaged in mining, manufacturing, buying, and selling coal, coke, ore, iron and steel products, etc., which directed them to furnish monthly reports in the form prescribed showing output of every kind, itemized cost of production, sale prices, contract prices, capacity, buying orders, depreciation, general administration and selling expenses, income, general balance sheet, etc. Elaborate questionnaires, accompanying these orders, asked for answers revealing the intimate details of every department of the business, both intrastate and interstate. A summary of these printed in the margin sufficiently indicates their contents. 1 The concluding paragraph of the notice de- [274 U.S. 160, 168] clared:
Appellees did not comply with the inquiries in the notices but filed in the Supreme Court District of Columbia, their joint bill against the Commission and its members, wherein they set out its action, alleged that it had exceeded its powers, and asked that all defendants be restrained 'from the enforcement of said orders, and from requiring answers to said questionnaires, and from taking any proceedings whatever with reference to the enforcement of compliance with said orders and answers to said questionnaires'; also for general relief.
Without questioning the appellees' right to seek relief by injunction, the appellants answered, admitted issuing of the orders, claimed authority therefor under sections 6 and 9, Federal Trade Commission Act (Act Sept. 26, 1914, c. 311, 38 Stat. 717, 721, 722 (Comp. St. 8836f, 8836i)), and further alleged and said:
That the reports were required 'for all the purposes and under all the authority granted to them by law, including the purpose of gathering and compiling said information for publication and the consequent regulation of the interstate commerce of said complainants resulting from such publication of the true trade facts as to all of the business of complainants and of others en- [274 U.S. 160, 169] gaged in commerce in those commodities, and including the purpose of making reports to Congress and of recommending additional legislation to Congress.
[274 U.S. 160, 170] 'That in addition to the regulatory effect, in and of itself, of such public dissemination of the complete facts, it is one of the purposes of these activities to gather and convey to Congress, for its information in the performance of its duties, the full and complete facts, in order that instead of legislating on incomplete or partial or prejudiced information, it may have the full facts before it. That if any regulatory effect upon intrastate commerce flows from such publicity, it is merely incidental to the general regulation of interstate commerce, as to which the power of Congress is complete.'
The cause was heard upon motion to strike the answer from the files because it contained no adequate defense. The trial court concluded that, as the propounded questions were not limited to interstate commerce, but asked also for detailed information concerning mining, manufacture and intrastate commerce, they were beyond the Commission's authority. 'The power claimed by the Commission is vast and unpracticable. The mere fact that a corporation engaged in mining ships a portion of its product to other states does not subject its business of production or its intrastate commerce to the powers of Congress.' It accordingly held the answer insufficient, and, as defendants declined to amend, granted the injunction as prayed. The Court of Appeals affirmed this action. 52 App. D. C. 202, 285 F. 936. The cause, here by appeal, has been twice argued.
Appellees were not charged with practicing unfair methods of competition (section 5, Act of Sept. 26, 1914 (Comp. St. 8836e)), or violating the Clayton Act, c. 323, 2, 3, 7, 8 (38 Stat. 730, 731, 732, being Comp. St. 8835b, 8835c, 8835g, 8835h). Orders under such charges can be enforced only through a Circuit Court of Appeals. Section 11, Clayton Act (Comp. St. 8835j); section 5, Federal Trade Commission Act ( Comp. St. 8836e).
The action of the Commission here challenged must be justified, if at all, under the paragraphs of sections 6 and 9. Act of September 26, 1914, copied below, and the only [274 U.S. 160, 171] methods prescribed for enforcing orders permitted by any of these paragraphs are specified in sections 9 and 10 (Comp. St. 8836i, 8836j). They are application to the Attorney General to institute an action for mandamus, and proceedings by him to recover the prescribed penalties.
[274 U.S. 160, 173] 'Upon the application of the Attorney General of the United States, at the request of the Commission, the District Courts of the United States shall have jurisdiction to issue writs of mandamus commanding any person or corporation to comply with the provisions of this act or any order of the Commission made in pursuance thereof. ...
There was nothing which the Commission could have done to secure enforcement of the challenged orders except [274 U.S. 160, 174] to request the Attorney General to institute proceedings for a mandamus or supply him with the necessary facts for an action to enforce the incurred forfeitures. If, exercising his discretion, he had instituted either proceeding, the defendant therein would have been fully heard, and could have adequately and effectively presented every ground of objection sought to be presented now. Consequently the trial court should have refused to entertain the bill in equity for an injunction.
We think that the consent of the parties was not enough to justify the court in considering the fundamental question that has been twice argued before us. It was intended by Congress in providing this method of enforcing the orders of the Trade Commission to impose upon the Attorney General the duty of examining the scope and propriety of the orders, and of sifting out of the mass of inquiries issued what in his judgment was pertinent and lawful before asking the court to adjudge forfeitures for failure to give the great amount of information required or to issue a mandamus against those whom the orders affected and who refused to comply. The wide scope and variety of the questions, answers to which are asked in these orders, show the wisdom of requiring the chief law officer of the government to exercise a sound discretion in designating the inquiries to enforce which he shall feel justified in invoking the action of the court. In a case like this, the exercise of this discretion will greatly relieve the court and may save it much unnecessary labor and discussion. The purpose of Congress in this requirement is plain, and we do not think that the court below should have dispensed with such assistance. Until the Attorney General acts, the defendants cannot suffer, and, when he does act, they can promptly answer and have full opportunity to contest the legality of any prejudicial proceeding against them. That right being adequate, they were not in a position to ask relief by injunction. The bill should have been dismissed for want of equity. [274 U.S. 160, 175] This conclusion leads to a reversal of the decree of the District Court of Appeals, and a remanding of the case to the Supreme Court of the District with direction to dismiss the bill.
Mr. Justice SUTHERLAND and Mr. Justice BUTLER took no part in the consideration or decision of this case.
The separate opinion of Mr. Justice McREYNOLDS:
I think the decree below should be affirmed-the Commission went beyond any power granted by Congress.
This appeal was taken four years ago. Nearly seven years have passed since the cause began-June 12, 1920. Able counsel have argued it twice before us, but none suggested that the trial court erred in failing to dismiss the bill because there was an adequate remedy at law. Under well- settled doctrine such a defense may be waived by failure promptly to advance it. Reynes v. Dumont, 130 U.S. 354, 395 , 9 S. Ct. 486; Singer Sewing Machine Co. v. Benedict, 229 U.S. 481, 484 , 33 S. Ct. 942; American Mills Co. v. American Surety Co., 260 U.S. 360, 363 , 43 S. Ct. 149.
In my view it is now much too late for this court first to set up and then maintain the defense of lack of jurisdiction in the trial court, and I cannot acquiesce in the disposition of the cause upon that instable ground. The real issue should be met and determined.
[ Footnote 1 ] Summary of interrogatories submitted by Federal Trade Commission to sundry corporations with direction to report monthly:
(1) Quantities of 44 specified products produced.
(2) Costs of 25 products from each battery of ovens, furnace, mill, or other unit of operation.
(3) Sales prices ('actual realization f. o. b. mill after deduction of freight allowance') of 19 products separately as to domestic and export shipments.
(4) Contract prices ('base price less freight allowance') named in orders for future delivery of 19 products, separately as to domestic and export shipments.
(5) Capacity of ovens, furnaces, works, and mills in respect of 18 products.
(6) Orders booked during each month and orders unfilled at the end of each month respecting 19 products.
(7) Depreciation and general administrative and selling expenses allocated to 17 products, details of income from other sources, balance of net income transferred to surplus, with details of interest, rentals, cash discounts on purchases, royalties, dividends from affiliated or subsidiary companies, income from outside investments, and details of deductions from net income, including federal income and excess profit taxes, interest on bonds and notes, sinking fund provisions, discount on bonds and notes, losses on investments, amortization, losses on contracts, reorganization expenses, fire losses, donations, adjustment of property value, and bonuses to officials.