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its term by virtue of the national acts to regulate commerce the time during which a different rate is filed and published under the laws. Such a contract constitutes no defense to a charge of giving or receiving a rebate or concession from the filed and published rate. The giving and the receiving of every rebate or concession, whereby property in interstate or foreign commerce is transported at a less rate than that legally filed and published, whether this rebate or concession was obtained under a previous contract or not, is illegal under the Elkins act. Congress made no exception, and it is not the province of the courts to do so.
These conclusions are the logical result of, and are sustained by, the opinion of the Supreme Court in New Haven & Hartford R. Co. v. Interstate Commerce Commission, 200 U. S. 361, 391, 398, 26 Sup. Ct. 272, 50 L. Ed. 515. In the course of the litigation in that case, it became necessary for the Supreme Court to consider and determine the validity of a contract made in 1896 between the Chesapeake & Ohio Company and the New Haven Company, whereby the former agreed to sell and deliver coal, which it bought in West Virginia, at New Haven, in Connecticut, at a fixed price per ton. The Chesapeake & Ohio Company transported the coal from the mines in West Virginia to Newport News and hired its carriage from that place to New Haven. The Interstate Commerce Commission claimed that this contract was illegal, because, when the purchase price of the coal in West Virginia and the cost of transportation from Newport News to New Haven were deducted from the selling price, the amount remaining was less than the filed and published rate from the mines in West Virginia to Newport News. The Chesapeake & Ohio Company answered, among other things, that, when the contract was made, the purchase price of the coal and the cost of the transportation from Newport News to New Haven were so low that their deduction from the selling price left an amount equal to the established rate from the mines in West Virginia to Newport News, and that if subsequently the cost of the coal and of the transportation from Newport News to New Haven increased, so that the compensation of the Chesapeake & Ohio Company for its part of the carriage was less than the established rate, the contract was valid in its inception and continued to be so. Of this contention the court said:
“Further, as the probibition of the interstate commerce act is ever operative, even if the facts established that at the particular time the contract was made, considering the then cost of coal and other proper items, the net published tariff of rates would have been realized by the Chesapeake & Ohio from the contract, which is not the case, it is apparent that the deliveries under the contract came under the prohibition of the statute whenever for any cause, such as the enhanced cost of the coal at the mines, an increase in the cost of the ocean carriage, etc., the gross sum realized was not sufficient to net the Chesapeake & Ohio its published tariff of rates. This must be the case in order to give vitality to the prohibitions of the interstate commerce act against the acceptance at any time by a carrier of less than its published rates. We say this because we think it obvious that such prohibitions would be rendered wholly ineffective by deciding that a carrier may avoid those prohibitions by making a contract for the sale of a commodity stipulating for the payment of a fixed price in the future, and thereby acquiring the power during the life of the contract to continue to execute it, although a violation of the act to regulate commerce might arise from doing so."
5. Finally, the judgment of conviction is assailed on the grounds that the facts stipulated do not support the charge, and that they disclose no evidence of any criminal intent on the part of the shipper. The charge was that, upon a through shipment from Kansas City to New York for export, the packing company received a concession of 12 cents per 100 pounds from the established rate of 35 cents per 100 pounds for that part of the route between the Mississippi river and New York. The agreed facts were that the tariffs filed and published prior to August 6, 1905, showed the rate for the carriage from the Mississippi river to New York upon products of the character shipped to be 23 cents per 100 pounds; that on June 17, 1905, the carrier contracted with the shipper to transport these products until December 31, 1905, at a rate the proportional part of which from the Mississippi river to New York was in fact 23 cents per 100 pounds; that on August 6, 1905, the Burlington company and its connecting carriers filed and caused to be published an amendment of their schedules and tariffs, which established a new rate the proportionate part of which for the carriage from the Mississippi river to New York was 35 cents per 100 pounds; that on June 16, 1905, the shipper contracted with the proprietors of the Wilson line for the transportation of property of this character from New York to Christiania, Norway, at the rate of 19.93 cents per 100 pounds; that on August 17, 1905, the packing company delivered the shipment to the Burlington company for transportation from Kansas City to Christiania, Norway, under a through bill of lading at the rate of 52.93 cents per 100 pounds, of which 19.93 cents was the agreed ocean rate; that "the full rate for the through carriage was in fact made up so that the proportionate part of the rate for the carriage from the Mississippi river to New York was 23 cents per 100 pounds. The packing company did not at any time know how the rate was apportioned or made up or divided among the respective carriers or points, except that it knew the steamship rate.” But “it knew of the filed, published, and posted rate on the character of property embraced in the shipment established by the amendment" of August 6, 1905, and “shipments were made and carried according to the terms of said contract before August 6, 1905, and the provisions and products named in the indictment herein as shipped and carried were carried under said contract; the defendant company, shipper, contending and insisting that said amendment increasing the tariff rate did not and could not impair the terms of the contract." Counsel for the packing company insist that the last clause quoted means that the shipper was contending and insisting at the time of the trial, while the district attorney asserts that it refers to the time when the provisions and products were shipped and carried. The latter construction must prevail, because the paragraph in which this clause occurs relates to the time of the shipment, and not to the time of the trial.
The alleged defect in this proof is that the indictment charged a concession from a rate of 35 cents per 100 pounds shown on the filed and published schedules for the carriage from the Mississippi river to New York, while the agreed facts are that this rate of 35
cents did not appear on the filed and published tariffs and schedules, but it was the part of the rate from Kansas City to New York there published proportionate to the transportation from the Mississippi river to New York. But this was an immaterial variance, because the stipulated facts also show that this 35 cents was in fact the part of the published rate from Kansas City to New York proportionate to the carriage from the Mississippi river to New York: that the packing company knew this published rate, which must have been much more than 35 cents, the part of it proportionate to the carriage east of the river; that it also knew that it was paying 52.93 cents less the ocean rate, 19.93 cents, or only 33 cents, for the entire transportation from Kansas City to New York, a rate which was in fact 2 cents less than the rate proportionate to the carriage east of the river. It must therefore have known that it was receiving a concession from the published rate from Kansas City to New York, and hence a proportionate concession from every part of it, in the absence of proof that the entire concession was accepted from some specific part.
And here also is the evidence of criminal intent, the evidence that the shipper knew it was receiving, and that it intended to secure, a concession whereby its property was transported in foreign commerce at a less rate than that legally filed and published. “Contending and insisting that said amendment increasing the tariff rate did not, and could not, abrogate or impair the terms of said contract,” the defendant knew it was receiving, and it intended to secure, a concession from the filed and published rate, knew that it was committing an act which the Elkins act declared to be illegal, and this is the only criminal intent requisite to convict of a statutory offense that is not wrong in itself. A corrupt purpose, a wicked intent to do evil, is indispensable to a conviction of a crime which is morally wrong. But no evil intent is essential to an offense which is a mere malum prohibitum. A simple purpose to do the act forbidden, in violation of the statute, is the only criminal intent requisite to a conviction of a statutory offense, which is not malum in se. Bishop on Statutory Crimes, § 596b; 1 Bishop's Crim. Law (8th Ed.) 88 343, 345, par. 4.
No question of liability on account of a concession given or received under a mistake of fact or in ignorance of the established rate is presented in this case, because the defendant knew the filed and published rate, and that it was receiving a concession from it. The only mistake it pleads or proves was an error of law, its unfounded belief that by means of a contract with the carrier it could annul or evade the plain declaration of the statute that the concession it received was illegal, and such an error of law excuses no one. Wharton's Crim. Law (9th Ed.) § 84; U. S. v. Anthony, 24 Fed. Cas. 829, 831, 832, No. 14,459; State v. Zichfield, 46 Pac. 802, 805, 806, 23 Nev. 304, 34 L. R. A. 784, 62 Am. St. Rep. 800; State v. Hughes, 58 Iowa, 165, 169, 11 N. W. 706; Hoover v. State, 59 Ala. 57; Reynolds v. U. S., 98 U. S. 145, 167, 25 L. Ed. 244. The agreed facts were sufficient to sustain the judgment, and there was substantial evidence of the criminal intent of the shipper.
Counsel for the shipper have insisted, and the district attorney has denied, that any criminal intent was essential to a conviction of the statutory offense here charged. It has not been necessary to consider or decide, and the court has not considered, and does not decide, that question, because there was ample evidence that the shipper was guilty of the only criminal intent that could be requisite to such a conviction. The case has been determined on the assumption and concession, but not upon a decision that such an intent was indispensable.
A deliberate and patient consideration of the many and grave questions which have been presented in these cases has led to the conclusion that there was no error in their trial, and the judgments below must be affirmed.
JOHN D. PARK & SONS CO. v. HARTMAN.
(Circuit Court of Appeals, Sixth Circuit. March 14, 1907.)
1. MONOPOLIES–CONTRACTS IN RESTRAINT OF TRADE-SALE OF ARTICLE MADE
BY SECRET PROCESS.
The exemption from the common-law rule against monopoly and restraint of trade, and the provisions of the federal anti-trust act of July 2, 1890 (26 Stat. 209, c. 647 [U. S. Comp. St. 1901, p. 3200]), which has been extended to contracts affecting the sale and resale, the use or the price of articles made under a patent, or productions covered by a copyright, does not extend also to articles made under a secret process or medicine com
pounded under a private formula. 2. SAME-PROPERTY RIGHTS-SECRET PROCESS OR FORMULA.
While the owner of a patent or copyright is protected in bis exclusive right by the statute which gives him a monopoly, there is no statute which protects one who makes or vends an article which is made by a secret process or private formula, nor, so long as he keeps his process secret, can he bring himself within the principle of the statute which grants a temporary monopoly in consideration of the full publication of
the invention or work. 3. CONTRACTS IN RESTRAINT OF TRADE-SALE OF ARTICLES MADE BY SECRET
The owner of a secret process or formula is not protected by law in his secret, hyit he may protect himself by contract against its disclosure by one to woom it is communicated in confidence, or restrict its use by such person, and such contracts are not in restraint of trade because of the character of the property right in the secret which would be destroyed by its disclosure, and because it is not in itself an article of commerce, but such considerations do not apply to contracts for the sale of the manufactured product which do not involve a disclosure of the secret,
and such contracts are within the rules against restraint of trade. 4. SAME.
The fact that an article of commerce is sold under a trade-name or in a trade dress affords it no exemption from the common-law or statutory
rules against restraint of trade. 5. SAME.
The sole manufacturer of a medicine made in accordance with a secret formula, but unpatented, sold the same only under a system of contracts between himself and wholesale dealers to whom alone he sold at uniform prices, by which they bound themselves to sell at a certain price
and only to retall dealers designated by him, and between him and such retail dealers, by which in consideration of being so designated they bound themselves to sell to consumers only and at a certain price. Such contracts had been entered into as the manufacturer alleged by a large majority of the wholesale and retail druggists in the United States. Held, that such system of contracts was prima facie Illegal both at common law as in unreasonable restraint of trade and under the federal anti-trust act of July 2, 1890 (26 Stat. 209, c. 647 [U. S. Comp. St. 1901, p. 3200]), where it affected interstate sales ; its purpose and effect being to prevent competition between purchasers of the medicine both wholesale and retail, and that, in the absence of allegation of facts showing it to be necessary for the protection of the manufacturer's business, a court of equity would not aid in the enforcement of the contracts by granting an injunction to prevent a defendant, who was not a party thereto, from buying the medicine from purchasers who were, and reselling the same at any price it might see fit.
[Ed. Note.—Rights and liabilities of parties contracting with trusts or combinations in restraint of trade, see note to Chicago Wall Paper
Mills v. General Paper Co., 78 C. C. A. 612.) 6. SAME-SINGLE CONTRACT.
A single contract, although it be such as, taken alone, may not be withIn the rule at common law against contracts in restraint of trade, which is one of a great number of identical contracts made between the producer of an unpatented article of commerce and dealers therein, forming a "system" of contracts, which, taken as a whole, materially affects the public interests by stilling competition and trade in said article, is an unreasonable restraint, and within the rule at common law against contracts in restraint of trade, if, from an examination of the workings of the whole system, it appears that the restraint is actually, though not ostensibly, the main result and object of the system of contracts, and not merely ancil
lary or incidental to another and legitimate object. Appeal from the Circuit Court of the United States for the Eastern District of Kentucky.
For opinion below, see 145 Fed. 358.
The plaintiff below is a manufacturer of certain proprietary medicines, the chief of which is the well-known article called "Peruna." This, together with other preparations, he puts on the market through a system of contracts intended to maintain prices. Thus it is aperred that he sells only to jobbers or wholesalers at uniform prices with a discount varying according to quantity, Each' such jobber is required to sign a written agreement to sell only to re tailers whose names shall be furnished by complainant, and who shall have signed a retailer's agreement with him obligating them to sell only to consumers at a price named by the complainant or found on his labels and wrappers. To enable him to discover violations of the agreement to sell only for consumption and only to consumers, each such retailer is required to stamp or write his name on each bottle or package sold, and, to insure against saies by wholesalers to unlicensed retailers, each sale must be reported to the complainant. The averment is that there has grown up a very large demand for "Peruna," and that such contracts have been made with jobbers and wholesalers all over the United States, and that “a majority of the retail druggists of the country have executed such contracts.”
The defendant is a corporation organized under the laws of Kentucky, and Is engaged in the jobbing or wholesale drug and proprietary medicine busiDess. It is charged that the defendant company, with full knowledge of complainant's method of contracting the sales of "Peruna,” has refused to enter into any contract with the complainant, and is not therefore entitled “to buy or deal in your orator's medicines and remedies.” It is then averred that defendant company, in combination with other wholesalers and retailers, who have refused to sign complainant's contracts, has "unlawfully and fraudulently obtained and procured your orator's remedies and medicines, including Peruna,' from your orator's wholesale and retail agents, both directly and indirectly, by means of false and fraudulent representations and by surrepti