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U. S. v. COLGATE & CO. , 250 U.S. 300 (1919)

U.S. Supreme Court

U. S. v. COLGATE & CO. , 250 U.S. 300 (1919)

250 U.S. 300

No. 828.

Argued March 10, 1919.
Decided June 2, 1919.

[250 U.S. 300, 301]   Mr. G. Carroll Todd, Asst. Atty. Gen., for the United States.

Mr. Charles E. Hughes, of New York City, for defendant in error.

Mr. Justice McREYNOLDS delivered the opinion of the Court.

Writs of error from Districts Courts directly here may be taken by the United States 'from a decision or judgment quashing, setting aside, or sustaining a demurrer to, any indictment, or any count thereof, where such decision or judgment is based upon the invalidity, or construction of the statute upon which the indictment is founded.' Act March 2, 1907, c. 2564, 34 Stat. 1246 (Comp. St. 1704). Upon such a writ 'we have no authority to revise the mere interpretation of an indictment and are confined to ascertaining whether the court in a case under review erroneously construed the statute.' 'We must accept that court's interpretation of the indictments and confine our review to the question of the construction of the statute involved in its [250 U.S. 300, 302]   decision.' United States v. Carter, 231 U.S. 492, 493 , 34 S. Sup. Ct. 173, 174 (58 L. Ed. 330); United States v. Miller, 223 U.S. 599, 602 , 32 S. Sup. Ct. 323, 324 (56 L. Ed. 568).

Being of opinion that 'the indictment should set forth such a state of facts as to make it clear that a manufacturer, engaged in what was believed to be the lawful conduct of its business, has violated some known law before it can be haled into court to answer the charge of a commission of a crime,' and holding that it 'fails to charge any offense under the Sherman Act [Act July 2, 1890, c. 647, 26 Stat. 209) or any other law of the United States, that is to say, as to the substance of the indictment and the conduct and act charged therein,' the trial court sustained a demurrer to the one before us. Its reasoning and conclusions are set out in a written opinion. 253 Fed. 522.

We are confronted by an uncertain interpretation of an indictment itself couched in rather vague and general language. Counsel differ radically concerning the meaning of the opinion below and there is much room for the controversy between them.

The indictment runs only against Colgate & Co., a corporation engaged in manufacturing soap and toilet articles and selling them throughout the Union. It makes no reference to monopoly, and proceeds solely upon the theory of an unlawful combination. After setting out defendant's organization, place and character of business, and general methods of selling and distributing products through wholesale and retail merchants, it alleges:

Following this is a summary of things done to carry out the purposes of the combination: Distribution among dealers of letters, telegrams, circulars and lists showing uniform prices to be charged; urging them to adhere to such prices and notices, stating that no sales would be made to those who did not; requests, often complied with, for information concerning dealers who had departed from specified prices; investigation and discovery of those not adhering thereto and placing their names upon 'suspended lists;' requests to offending dealers for assurances and promises of future adherence to prices, which were often given; uniform refusals to sell to any who failed to give the same; sales to those who did; similar assurances and promises required of, and given by, other dealers followed by sales to them; unrestricted sales to dealers with established accounts who had observed specified prices, etc.

Immediately thereafter comes this paragraph:

In the course of its opinion the trial court said:

Our problem is to ascertain, as accurately as may be, what interpretation the trial court placed upon the indictment-not to interpret it ourselves; and then to determine whether, so construed, it fairly charges violation of the Sherman Act. Counsel for the government maintain, in effect, that, as so interpreted, the indictment adequately charges an unlawful combination (within the doctrine of Dr. Miles Medical Co. v. Park & Sons Co., 220 U.S. 373 , 31 Sup. Ct. 376) resulting from restrictive agreements between defendant and sundry dealers whereby the latter obligated themselves not to resell except at agreed prices, and to support this position they specifically rely upon the above-quoted sentence in the opinion which begins, 'In the view taken by the court,' etc. On the other hand, defendant maintains that looking at the whole opinion it plainly construes the indictment as alleging only recognition of the manufacturer's undoubted right to specify resale prices and refuse to deal with any one who failed to maintain the same.

Considering all said in the opinion (notwithstanding some serious doubts) we are unable to accept the construction placed upon it by the government. We cannot, e. g., wholly disregard the statement that--

And we [250 U.S. 300, 307]   must conclude that, as interpreted below, the indictment does not charge Colgate & Co. with selling its products to dealers under agreements which obligated the latter not to resell except at prices fixed by the company.

The position of the defendant is more nearly in accord with the whole opinion and must be accepted. And as counsel for the Government were careful to state on the argument that this conclusion would require affirmation of the judgment below, an extended discussion of the principles involved is unnecessary.

The purpose of the Sherman Act is to prohibit monopolies, contracts and combinations which probably would unduly interfere with the free exercise of their rights by those engaged, or who wish to engage, in trade and commerce-in a word to preserve the right of freedom to trade. In the absence of any purpose to create or maintain a monopoly, the act does not restrict the long recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal; and, of course, he may announce in advance the circumstances under which he will refuse to sell. 'The trader or manufacturer, on the other hand, carries on an entirely private business, and can sell to whom he pleases.' United States v. Trans- Missouri Freight Association, 166 U.S. 290, 320 , 17 S. Sup. Ct. 540, 551 (41 L. Ed. 1007). 'A retail dealer has the unquestioned right to stop dealing with a wholesaler for reasons sufficient to himself, and may do so because he thinks such dealer is acting unfairly in trying to undermine his trade.' Eastern States Retail Lumber Dealers' Association v. United States, 234 U.S. 600, 614 , 34 S. Sup. Ct. 951, 955 (58 L. Ed. 1490, L. R. A. 1915A, 788). See also Standard Oil Co. v. United States, 221 U.S. 1, 56 , 31 S. Sup. Ct. 502, 34 L. R. A. (N. S.) 834, Ann. Cas. 1912D, 734; United States v. American Tobacco Co., 221 U.S. 106, 180 , 31 S. Sup. Ct. 632; Boston Store of Chicago v. American Graphophone Co. et al., 246 U.S. 8 , 38 Sup. Ct. 257, 62 L Ed. 551, Ann. Cas. 1918C, 447. In Dr. Miles Medical Co. v. Park & Sons Co., supra, the unlawful [250 U.S. 300, 308]   combination was effected through contracts which undertook to prevent dealers from freely exercising the right to sell.

The judgment of the District Court must be


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