1. Where the facts stipulated before the Federal Trade
Commission showed that wholesale dealers dominating the trade in a
certain commodity in several states were members of local and
general trade associations; that uniform prices in intrastate sales
were fixed and diligently enforced by the local associations, and,
in the case of one of them, were, by understanding among its
members, to be applied to sales made outside of the state; that
each local association applied the local prices to sales made
locally, but filled by direct shipment from outside mills, and that
the salesmen of each, in making sales beyond its state, habitually
quoted prices from the same lists which were controlling locally,
the Commission was justified in inferring that such use of the
lists in sales over the state line lessened competition and fixed
prices in interstate commerce,
Page 273 U. S. 53
although it did not appear expressly that the fixed prices were
made obligatory by rule, or were adhered to, in such interstate
business. P.
273 U. S.
61.
2. An understanding, express or tacit, that agreed prices will
be followed in interstate sales is enough to constitute
transgression of the law. P.
273 U. S.
62.
3. Organized maintenance of uniform prices in local business may
lend probative significance and weight to facts pointing in the
direction of like restraint in interstate business. P.
273 U. S.
62.
4. Agreements between wholesalers by which they fix prices to be
charged retailers within the state for goods to be shipped on the
wholesaler's order from mills directly to the retailer or to the
wholesaler for delivery to him are agreements to fix prices in
interstate commerce in cases where the seller elects to procure the
goods and their shipment from mills outside the state. P.
273 U. S.
63.
5. An order of the Federal Trade Commission forbidding
agreements fixing prices for sales to be filled by shipments from
outside the state, and the making or distributing of price lists to
be used in such sales, is valid. P.
273 U. S.
66.
6. A respondent in certiorari who did not seek review for
himself is not entitled to question the correctness of the decree
of the court below. P.
273 U. S.
66.
4 F.2d 457 reversed in part.
Certiorari (268 U.S. 684) to judgment of the circuit court of
appeals reviewing, and in part setting aside or modifying, an order
of the Federal Trade Commission requiring the respondents to cease
and desist from certain practices which are described in the
opinions here and in the court below. The respondents, included,
besides individuals, five local trade associations whose members
were wholesale dealers and jobbers in paper, two associations or
conferences made up of two or more of the local associations, and a
general association the membership of which was drawn from all five
of the local associations.
Page 273 U. S. 58
MR. JUSTICE BUTLER delivered the opinion of the Court.
The Federal Trade Commission made an order requiring respondents
to cease and desist from certain methods of competition in
interstate commerce found to be in violation of ยง 5 of the Federal
Trade Commission Act of September 26, 1914, c. 311, 38 Stat. 717. 7
Federal Trade Commission Decisions 155. The order contains eight
paragraphs, designated by letters (a) to (h), inclusive. The
respondents brought (b), (c), (e), (g), and (h) under review in the
circuit court of appeals. The first two were set aside, paragraph
(e) was modified, and the last two were allowed to stand. This
Court granted certiorari (268 U.S. 684) on petition of the
Commission, which asks reversal of the decree as to paragraphs (b)
and (c). No petition has been filed by respondents.
The facts were stipulated, and those here material are: dealers
in paper in each of the five principal jobbing centers in the
states on the Pacific Coast have a local association. These centers
are Seattle and Tacoma taken as one, Spokane, Portland, San
Francisco, and Los Angeles.
Page 273 U. S. 59
And there is a general association known as the Pacific states
Paper Trade Association, whose members are the paper dealers in
these centers, including most, but not all, of the members of the
local associations, and some who do not belong to a local
association. The respondents in this case are the five local
associations, the general association, and their members.
The territory served by the members of each local association,
while loosely defined, is that naturally tributary to the center
where the members are located. The territory of Seattle and Tacoma
is the northwestern part of Washington and Alaska; that of Spokane
is eastern Washington, northern Idaho, and western Montana; that of
Portland is Oregon, southerly Washington, and part of southern and
western Idaho; that of San Francisco is the north half of
California, a small portion of southern Oregon, and part of Nevada,
and that of Los Angeles is the south half of California and part of
Nevada and Arizona. A majority of the dealers in the Pacific Coast
states are members of the associations, and they have 75 percent of
the business in paper and paper products, exclusive of roll
newspaper, which for the most part is not handled by them.
Each local association distributes uniform price lists to its
members to be observed in its territory within the state. The
secretary of each is authorized to investigate complaints against
members to determine whether they sell below the established
prices, and three of the associations authorize the imposition of
heavy fines on members for making such sales.
The Spokane Association, in its list of prices established for
Washington, printed "suggested prices" for sales to purchasers in
Idaho and western Montana, and there was a tacit or implied
understanding that the prices suggested would be observed.
And these association lists are habitually carried and used by
the salesmen of members in quoting prices and
Page 273 U. S. 60
making sales outside the state. No association has any
requirement that such price lists be observed outside the state,
and the quoting of, or the making of sales at, lower, or different
prices in such territory is not deemed an infraction of rules or
trade regulations by reason of which any jobber or wholesaler may
complain.
Among the prices fixed by each local association for sales by
its members within the state where they are located are prices on
what are called "mill shipments." These are sales or orders not
requiring immediate delivery and capable of being filled by
shipment from the place of manufacture. They include less than
carload lots and also carload lots. The former are combined with
other paper to make a carload, which is shipped to the wholesaler
as a single consignment. At destination, the delivery is taken by
the wholesaler, and the portion intended for the purchaser is
turned over to him. The carload shipments are made on directions
specifying as the point of destination the place where delivery is
to be made from the wholesaler to the purchaser. In some cases, the
wholesaler, in other cases the purchaser, is named as consignee.
When so named, the wholesaler either takes delivery and turns over
the shipment to the purchaser or indorses the bill of lading to the
purchaser, who then receives the paper directly from the carrier.
Where named as consignee, the purchaser takes delivery. In all
cases, the wholesaler orders the paper from the mill and pays for
it. There is no contractual relation between the manufacturer and
the purchaser from the wholesaler. These shipments are made from
mills within, and also from those without, the state covered by the
agreement fixing prices.
The Commission, in its findings, substantially follows the
stipulated facts, and from them it draws certain inferences or
conclusions. Referring to the prices fixed by the local
associations, the Commission said the habitual carrying and use of
such price lists by member jobbers in
Page 273 U. S. 61
quoting prices and making sales outside the state have a natural
tendency to and do limit and lessen competition therein, and the
result of such practice is fixed and uniform prices for such
products within such territories. As to mill shipments, the
Commission finds the facts in accordance with the stipulation, and
concludes that mill shipments from points outside the state to or
for purchasers within the state are in interstate commerce until
delivered to the purchaser, and that the inclusion of fixed and
uniform prices for such sales in the price lists of the
associations eliminates price competition.
Paragraph (b) of the Commission's order is to prevent the local
associations, their officers and members, separately or in
combination, from using any price list fixed by agreement between
wholesalers in soliciting or selling in interstate commerce, and
from making and distributing any such price list intended for use
in making such sales. Paragraph (c) prohibits making or acting
under agreements fixing prices on mill shipments when the paper
sold is shipped from outside the state where the wholesaler is
located, and the making or distributing of price lists to be used
for making such sales.
The circuit court of appeals held that the stipulated facts do
not sustain the Commission's finding that the use of association
prices by members outside the state where they are located has a
tendency to lessen competition and to fix uniform prices in such
territories. The validity of the inference or conclusion drawn by
the Commission and of this part of the order depends upon the
proper estimation of the facts stipulated. The language
specifically relating to such use of the agreed prices, if
considered alone, might possibly be deemed insufficient. But the
Commission is not confined to so narrow a view of the case. That
part of the stipulation properly may be taken with all the admitted
facts and the inferences legitimately to be drawn from them.
Page 273 U. S. 62
The members of the associations dominate the paper trade in
question. They are organized to further common purposes. They limit
competition in intrastate trade by adherence to uniform prices
fixed by agreements through combination. The facts admitted show a
strong purpose and much diligence to that end. And some of their
activities are for like purpose, and have the same effect in the
field of interstate commerce. Suggested prices for Idaho and
Montana were sent out with the Spokane lists. There was an
understanding that such prices would be followed. Mill shipments,
whether shipped from within or from without the state, are subject
to the agreed prices. From the standpoint of respondents, restraint
upon price competition in their interstate commerce is as desirable
as in their business local to the states. In both classes of
business, they are stimulated by the same motive to lessen
competition. All the salesmen, while in intrastate territory, are
required to sell at prices fixed by agreement. And, when across the
state line in interstate territories, they use the agreed lists in
quoting prices and making sales. It does not appear whether the
prices so fixed are adhered to in interstate business. The fact
that there is no established rule that the lists shall be followed
in taking orders for interstate shipments or that the quoting of
lower prices is an infraction for which complaint may be made is
not controlling in favor of respondents. An understanding, express
or tacit, that the agreed prices will be followed is enough to
constitute a transgression of the law. No provision to compel
adherence is necessary. It would appear difficult for these jobbers
to maintain a uniform price list in the state while making sales
across the line at different and competing prices. The effective
combination to restrain price competition on one side of the state
line is not consistent with the absence of such restraint on the
other. The organized maintenance of uniform prices in business
local
Page 273 U. S. 63
to the states lends probative significance and weight to facts
pointing in the direction of like restraint in the interstate
territories. The use of the association prices by all the salesmen
in making sales in interstate territories is not necessarily to be
regarded as coincidence. There is ample ground for saying that such
use results from the admitted combination. The failure of the
stipulation to contain any direct statement on the subject does not
require it to be found that salesmen are free to depart from the
prices furnished them, or that the list used by one differs or may
differ from that used by others in the same locality.
The weight to be given to the facts and circumstances admitted,
as well as the inferences reasonably to be drawn from them, is for
the Commission. Its conclusion that the habitual use of the
established list lessens competition and fixes prices in interstate
territory cannot be said to be without sufficient support.
Paragraph (b) does not go beyond what is justified by the findings.
It is valid.
Paragraph (c) applies only to mill shipments from one state to
another. For the consummation of a transaction involving such a
shipment, two contracts are made. The first is for sale and
delivery by wholesaler to retailer in the same state. The seller is
free to have delivery made from any source within or without the
state. The price charged is that fixed by the local association.
The other contract is between the wholesaler and the manufacturer
in different states. There is no contractual relation between the
manufacturer and retailer. By the shipment of the paper from a mill
outside the state to or for the retailer, the wholesaler's part of
the first contract is performed. The question is whether the sale
by the wholesaler to the retailer in the same state is a part of
interstate commerce where subsequently, at the instance of the
seller and to perform his part of the contract, the paper is
shipped from a mill in another state to or for
Page 273 U. S. 64
the retailer. "Commerce among the states is not a technical
legal conception, but a practical one, drawn from the course of
business."
Swift & Co. v. United States, 196 U.
S. 375,
196 U. S. 398.
And what is or is not interstate commerce is to be determined upon
a broad consideration of the substance of the whole transaction.
Dozier v. Alabama, 218 U. S. 124,
218 U. S. 128.
Such commerce is not confined to transportation, but comprehends
all commercial intercourse between different states and all the
component parts of that intercourse. And it includes the buying and
selling of commodities for shipment from one state to another.
Dahnke-Walker Co. v. Bondurant, 257 U.
S. 282,
257 U. S. 290;
Lemke v. Farmers' Grain Co., 258 U. S.
50,
258 U. S. 55.
The absence of contractual relation between the manufacturer and
retailer does not matter. The sale by the wholesaler to the
retailer is the initial step in the business completed by the
interstate transportation and delivery of the paper. Presumably the
seller has then determined whether his source of supply is a mill
within or one without the state. If the contract of sale provided
for shipment to the purchaser from a mill outside the state, then
undoubtedly it would be an essential part of commerce among the
states.
Sonneborn Bros. v. Cureton, 262 U.
S. 506,
262 U. S. 515.
Clearly the absence of such a provision does not affect the
substance of the matter when in fact such a shipment was
contemplated and made.
Cf. Dozier v. Alabama, supra; Western
Union Tel. Co. v. Foster, 247 U. S. 105,
247 U. S. 113;
Lemke v. Farmers' Grain Co., supra, 258 U. S. 55.
The election of the seller to have the shipment made from a mill
outside the state makes the transaction one in commerce among the
states. And, on these facts, the sale by jobber to retailer is a
part of that commerce.
The lower court cites and quotes from
Ware & Leland v.
Mobile County, 209 U. S. 405.
Respondent cites
Moore v. New York Cotton Exchange,
270 U. S. 593, and
asserts that it is identical with the last mentioned case and with
the
Page 273 U. S. 65
one now before us. In the
Ware & Leland case,
brokers at their office at Mobile, Alabama, took orders from
customers to buy and sell contracts for future deliveries of cotton
and grain and sent the orders to another office of theirs for
execution on an exchange or board of trade in New York, New
Orleans, or Chicago. Such contracts were for the most part closed
out by sale or purchase of other contracts necessary to cover them.
No actual deliveries were made except in a few instances, and then
they were made outside Alabama at the place where the orders were
sent for execution. Deliveries, if any, of cotton purchased for a
customer were made to the brokers at the places where the exchanges
are located. When the Mobile office of brokers made delivery of
cotton on the sale of a future for a customer, the cotton was
shipped by the customer from Alabama to the place of sale, and
there delivered through the brokers to the buyer. Delivery of grain
on such contracts, when required, was made at Chicago. In the
Moore case, the contracts considered were between members
of the exchange made for the purchase or sale of cotton for future
delivery; the cotton was represented by warehouse receipts issued
by a licensed warehouse in New York, and was deliverable from the
warehouse. The transactions on exchanges and boards of trade, which
were considered in these cases, are essentially local in character.
It was well understood that they might be closed out without any
delivery. And while, for the most part if not wholly, the cotton
and grain deliverable under these contracts originated in other
states and had theretofore been transported in interstate commerce,
it was not contemplated by the parties, seller or buyer, that
delivery would be made while the commodity remained in such
commerce. It would be a mere chance if any such transaction should
be completed by delivery of the commodity while still the subject
of commerce among the states.
Page 273 U. S. 66
When regard is had to the facts and known course of business, it
is quite clear that the transactions considered in these cases are
essentially different from the mill shipments now before us.
And, as the contracts between the wholesaler and the retailer
constitute a part of commerce among the states, the elimination of
competition as to price by the application of the uniform prices
fixed by the local associations was properly forbidden by the order
of the Commission. Paragraph (c) is valid.
Respondents, notwithstanding their failure to petition for
certiorari, now ask for reversal of that part of the decree which
leaves in force part of paragraph (e) and paragraphs (g) and (h).
This Court has the same power and authority as if the case had been
carried here by appeal or writ of error. A party who has not sought
review by appeal or writ of error will not be heard in an appellate
court to question the correctness of the decree of the lower court.
This is so well settled that citation is not necessary. The
respondents are not entitled as of right to have that part of the
decree reviewed.
Hubbard v. Tod, 171 U.
S. 474,
171 U. S. 494;
French Republic v. Saratoga Vichy Spring Co., 191 U.
S. 427,
191 U. S. 440;
Alice State Bank v. Houston Pasture Co., 247 U.
S. 240,
247 U. S. 242;
cf. Hamilton-Brown Shoe Co. v. Wolf Brothers, 240 U.
S. 251,
240 U. S. 257.
And, assuming power, we are not moved by any persuasive
consideration to examine the parts of the Commission's order to
which respondents object.
That part of the decree which sets aside paragraphs (b) and (c)
of the Commission's order is reversed.