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U S v. A. SCHRADER'S SON, INC. , 252 U.S. 85 (1920)

U.S. Supreme Court

U S v. A. SCHRADER'S SON, INC. , 252 U.S. 85 (1920)

252 U.S. 85

No. 567.

Argued Jan. 22 and 23, 1920.
Decided March 1, 1920.

Messrs. Henry S. Mitchell, of Washington, D. C., and Solicitor General Alex. C. King, of Atlanta, Ga., for the United States.[ U S v. A. Schrader's Son, Inc. 252 U.S. 85 (1920) ]

[252 U.S. 85, 89]   Mr. Frank M. Avery, of New York City, for defendant in error.

[252 U.S. 85, 94]  

Mr. Justice McREYNOLDS delivered the opinion of the Court.

Defendant in error, a New York corporation, manufactured at Brooklyn, under letters patent, valves, gauges and other accessories for use in connection with automobile tires, and regularly sold and shipped large quantities of these to manufacturers and jobbers throughout the United States. It was indicted in the District Court, Northern District of Ohio, for engaging in a combination rendered criminal by section 1 of the Sherman Act of July 2, 1890 (26 Stat. 209, c. 6471), which declares illegal 'every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations.' After interpreting the indictment as indicated by quotations from its opinion which follow, the District Court sustained a demurrer thereto, basing the judgment upon construction of that act (264 Fed. 175):

The Court further said:

Our opinion in United States v. Colgate Co. declared quite plainly:

That upon a writ of error under the Criminal Appeals Act (34 Stat. 1246, c. 2564 [Comp. St. 1704]) '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 decision.' That we were confronted by an uncertain interpretation of an indictment itself couched in rather vague and general language, the meaning of the opinion below being the subject of serious controversy. The '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.' '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.'

And further:

The court below misapprehended the meaning and effect of the opinion and judgment in that cause. We had no intention to overrule or modify the doctrine of Dr. Miles Medical Co. v. Park & Sons Co., where the effort was to destroy the dealers' independent discretion through restrictive agreements. Under the interpretation adopted by the trial court and necessarily accepted by us, the indictment failed to charge that Colgate Company made agreements, either express or implied, which undertook to obligate vendees to observe specified resale prices, and it was treated 'as alleging only recognition if the manufacturer's undoubted right to specity resale prices and refuse to deal with any one who fails to maintain the same.'

It seems unnecessary to dwell upon the obvious difference between the situation presented when a manufacturer merely indicates his wishes concerning prices and declines further dealings with all who fail to observe them, and one where he enters into agreements-whether express or implied from a course of dealing or other circumstances-with all customers throughout the different states which undertake to bind them to observe fixed resale prices. In the first, the manufacturer but exercises his independent discretion concerning his customers and there is no contract or combination which imposes any limitation on the purchaser. In the second, the parties [252 U.S. 85, 100]   are combined through agreements designed to take away dealers' control of their own affairs and thereby destroy competition and restrain the free and natural flow of trade amongst the states.

The principles approved in Dr. Miles Medical Co. v. Park & Sons Co., should have been applied. The judgment below must be reversed and the cause remanded for further proceedings in conformity with this opinion.

Reversed and remanded.

Mr. Justice CLARKE concurs in the result.

Mr. Justice HOLMES and Mr. Justice BRANDEIS dissent.


[ Footnote 1 ] Comp. St. 8820.

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