1. A business of publishing and circulating farm journals, which
involves shipment of substantial quantities of the papers to other
States, and also the obtaining of advertising essential to the
business from customers in other States and the transportation
between customers and publishers over state lines of electrotypes
used in setting up the advertisements, involves interstate
commerce.
Blumenstock Bros. v. Curtis Publishing Co.,
252 U. S. 436,
distinguished. P.
293 U. S.
274.
2. To constitute a combination to restrain or monopolize a
business in interstate commerce within the meaning of §§ 1 and 2 of
the Sherman Act, it is not necessary that the restraint or
monopoly
Page 293 U. S. 269
should affect all of the business of the kind throughout the
country; it may relate to such part of it as is carried on in a
particular section of the country. Pp.
293 U. S.
277-278.
3. The Court will not search the record for grounds to sustain a
judgment where the ground upon which it was based proves untenable
and none other is suggested by respondent. P.
293 U. S.
281.
70 F.2d 3 reversed.
Certiorari to review the affirmance of a judgment directing a
verdict against the plaintiff in an action for triple damages under
§ 7 of the Sherman Act.
Page 293 U. S. 271
MR. JUSTICE BUTLER delivered the opinion of the Court.
Petitioner brought this action against respondents alleging
facts upon which it claimed they violated §§ 1 and 2 of the Sherman
Anti-Trust Act, and thereby caused injury to its property and
business for which it prayed recovery of threefold damages under §
7. The respondents answered separately by general denial. At the
close of all the evidence, they submitted a written motion that the
court direct a verdict in their favor. The court granted the motion
and entered judgment. The Circuit Court of Appeals affirmed. 70
F.2d 3.
Section 1 of the Sherman Act denounces "every contract,
combination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several States." 15 U.S.C.
§ 1. Section 2 declares:
"Every person who shall monopolize, or attempt to monopolize, or
combine or conspire with any other person or persons, to monopolize
any part of the trade or commerce among the several States . . .
shall be deemed
Page 293 U. S. 272
guilty of a misdemeanor."
15 U.S.C. § 2. Section 7 provides:
"Any person who shall be injured in his business or property by
any other person or corporation by reason of anything forbidden or
declared to be unlawful by this act, may sue therefor . . . and
shall recover three-fold the damages by him sustained, and the
costs of suit, including a reasonable attorney's fee."
26 Stat. 210.
For a number of years, 1928 to 1932, inclusive, next prior to
the commencement of this action, the petitioner and each respondent
other than the Midwest Farm Paper Unit, Inc., was a publisher of
one or more farm papers. Each is a general, and not a vocational,
paper; the larger part of its circulation is in the state where
printed; it does not circulate in any substantial number throughout
the country as a whole, and is called a state or sectional paper in
order to distinguish it from publications having a wider and what
is referred to as a national circulation. Petitioner publishes
weekly "The Indiana Farmer's Guide" at Huntington, Ind. Its
circulation is about 160,000, of which over two-thirds is in
Indiana and approximately 50,000 in other States. The respondent
Prairie Company publishes in Illinois "The Prairie Farmer" and the
"Indiana Edition" of the same, which has a large circulation in
Indiana. The Wallace Company publishes in Iowa "Wallace's Farmer
and Iowa Homestead." The Wisconsin Company publishes in Wisconsin
the "Wisconsin Agriculturist and Farmer." The McKelvie Company
publishes in Nebraska "The Nebraska Farmer." The Webb Company
publishes in Minnesota "The Farmer and Farm, Stock and Home," and
the "Dakota Edition" of the same. Advertising matter carried by
each of these publishers includes classified and display or
commercial advertisements. The latter only is involved in this
case. Each is largely dependent for financial success upon revenue
derived from
Page 293 U. S. 273
these advertisements. Most of the advertisers are located in
states other than those in which the papers are published. About
ninety percent of petitioner's advertisements comes from points
outside Indiana, and is obtained by correspondence, traveling
solicitors, and representatives located in different parts of the
country. Advertisers, in order to enable petitioner to print their
advertisements as desired, send to it from outside Indiana
electrotypes which, after being used, are returned to the
advertiser or held subject to his order.
The Midwest Unit is an agency incorporated in 1931 and the
successor of an organization formed in 1928. Its officers and
directors are representatives of the other respondents which make
use of that agency, as similarly use was made of its predecessor,
to procure at combination rates identical advertisements to be
published in their seven farm papers. The gist of the complaint is
that respondents entered into a contract, combination, and
conspiracy for the purpose of obtaining a monopoly of the farm
paper business, including the publication, circulation, and
distribution of advertisements of peculiar interest to farmers
"within the territory covered" by their publications; that, in
furtherance of this contract, combination, and conspiracy, they
conceived a plan and design calculated to break down and destroy
"competition with other farm publications within said territory;"
and that, in order to effectuate that purpose. they agreed upon a
combination schedule of advertising rates for all their
publications materially below the total of the separate rates of
each.
There was evidence tending to show that the combination rate for
advertisements in respondents' seven papers was much less than the
total of the separate charges for the same advertisements in any
six, that respondents, acting separately and in concert, sought and
obtained advertisements
Page 293 U. S. 274
for all seven papers at rates much less than the charges would
have been for identical advertisements, if omitting the "Indiana
Edition" of "The Prairie Farmer," they were published in the other
six and in petitioner's "Indiana Farmer's Guide." Thus, at least
according to petitioner's contention, it appears that, by means of
the combination rate, respondents, acting together pursuant to
agreement to that end, gave a substantial financial advantage to
advertisers choosing the "Indiana Edition" instead of the "Farmer's
Guide."
Petitioner contends that the ground upon which the district
court directed the verdict was that its activities were not shown
by the evidence to constitute interstate commerce. The record is
ambiguous. Respondents' motion did not specify any grounds upon
which they claimed to be entitled to the peremptory instruction.
There is nothing to indicate the arguments submitted or authorities
cited by either party. The court orally instructed the jury:
"There has been, in my opinion, a failure on the part of the
plaintiff in this case to show that there has been any restraint of
trade as between the different states. . . . That being true, this
Court would not have jurisdiction to entertain the case at all, and
your finding, under that state of facts, should be for the
defendants."
Respondents take no issue with the petitioner's assertion of
fact. But, impliedly assuming its correctness, they argue that,
while petitioner and respondents are engaged in interstate commerce
in the circulation of their papers, the subject matter of the suit
is not that business, but the making of contracts by respondents
for the insertion of advertising matter in their papers, and that
therefore the case is ruled by
Blumenstock Bros. Advertising
Agency v. Curtis Pub. Co., 252 U. S. 436,
252 U. S. 438.
And they say the trial court did not err in holding that
"there can be no restraint
Page 293 U. S. 275
or monopoly of interstate commerce when the subject matter of
the complaint does not relate to interstate commerce at all."
Thus, by a construction of the complaint that is utterly
untenable, they support the very basis upon which petitioner
maintains the district court rested its decision. Inferentially,
their contentions go far to show -- and, in the light of all the
circumstances, we find -- that the trial court's direction of
verdict and its judgment rests solely upon the ground that
petitioner failed to introduce evidence that its business or that
of respondents included interstate commerce.
Blumenstock Bros. Advertising Agency v. Curtis Pub. Co.,
supra, gives no support to that ruling. There, an advertising
agency sued a publishing company under § 7 of the Sherman Act for
damages alleged to have been caused to the agency by the
publisher's violation of § 2. Defendant moved to dismiss on the
ground that the complaint did not allege a cause of action within
the provisions of the act. The district court granted the motion
and entered judgment dismissing the suit for want of jurisdiction
over the defendant or the action, and included in the record a
certificate in accordance with § 238 of the Act of March 3, 1911,
36 Stat. 1157, that the question involved was whether the facts
alleged constituted a cause of action under the act.
We said (p.
252 U. S.
442):
"In the present case, . . . the subject matter dealt with was
the making of contracts for the insertion of advertising matter in
certain periodicals belonging to the defendant. It may be conceded
that the circulation and distribution of such publications
throughout the country would amount to interstate commerce, but the
circulation of these periodicals did not depend upon or have any
direct relation to the advertising contracts which the plaintiff
offered and the defendant refused to receive except upon the term
stated in the
Page 293 U. S. 276
declaration. The advertising contracts did not involve any
movement of goods or merchandise in interstate commerce, or any
transmission of intelligence in such commerce. This case is wholly
unlike
International Text-Book Co. v. Pigg, 217 U. S.
91, wherein there was a continuous interstate traffic in
textbooks and apparatus for a course of study pursued by means of
correspondence, and the movements in interstate commerce were held
to bring the subject matter within the domain of federal control,
and to exempt it from the burden imposed by state legislation."
And after reviewing earlier decisions the opinion continued (p.
252 U. S.
444):
"Applying the principles of these cases, it is abundantly
established that there is no ground for claiming that the
transactions which are the basis of the present suit, concerning
advertising in journals to be subsequently distributed in
interstate commerce, are contracts which directly affect such
commerce."
The business that is here alleged to have been damaged is the
publication and circulation of these farm papers. That business
includes the obtaining of advertising, the transportation between
states of electrotypes sent respectively to petitioner and
respondents by their customers to be used in setting up
advertisements, and the transportation of substantial quantities of
the papers in interstate commerce. Advertising at compensatory
rates is an essential element. The opinion in
Blumenstock Bros.
Advertising Agency v. Curtis Pub. Co., supra, assumed that a
publishing business such as that now under consideration would
amount to interstate commerce. There is no ground for the
contention that the evidence in this case is not sufficient to go
to the jury on the question of interstate commerce.
International Text-Book Co. v. Pigg, supra, pp.
217 U. S.
106-107;
Pensacola Tel. Co. v. Western Union,
96 U. S. 1,
96 U. S. 9-10;
Dahnke-Walker Milling Co. v. Bondurant, 257 U.
S. 282,
257 U. S.
290-291;
Di Santo v. Pennsylvania, 273 U. S.
34,
273 U. S. 36;
Eastman Kodak Co. v. Southern Photo Materials Co.,
273 U. S. 359,
273 U. S. 370,
273 U. S. 374;
Furst v. Brewster, 282 U. S. 493,
282 U. S. 497.
Cf.
Page 293 U. S. 277
N.Y. Life Ins. Co. v. Deer Lodge County, 231 U.
S. 495,
231 U. S. 510
et seq.
The Circuit Court of Appeals did not consider the ground upon
which the district court put the judgment. It impliedly assumed
that petitioner's business does include interstate commerce. It
accepted the assertion that, due to the combination rate of
respondents, petitioner lost commercial advertisers. In decision of
the case, the court said (p. 5):
"We are, however, not satisfied that appellant has established a
fact which rested upon it to prove,
viz., that, through
this combination, there was effected such a restraint of interstate
commerce as would materially affect the entire farm journal
advertising business. Such is the requirement laid down in
Standard Oil Co. v. United States, 283 U. S.
163. The facts in that case indicated a much greater
control of the gasoline production industry than is present in the
case before us. . . . Likewise, it seems the facts in
Appalachian Coals, Inc. v. United States, 288 U. S.
344, presented a case of much stronger domination by the
combinations that had formed than the one before us. . . . We
cannot escape the force of appellees' statement:"
" . . . If, as held in
Standard Oil Co. v. United
States . . . , the owners of 55 percent of the gasoline in the
United States could not by combination obtain a monopoly in
violation of the Sherman Act, and if, as held in
Appalachian
Coals, Inc. v. United States, . . . the owners of 74 percent
of the coal mined in a certain territory could not obtain a
monopoly in violation of the Sherman Act, then how can it be held
that 5 out of approximately 300 newspapers can obtain a monopoly of
advertising, and how can it be held that newspapers which do only
approximately 15 percent of the advertising in the farm journal
field can obtain a monopoly?"
"In the face of these two decisions, we agree with Judge
Baltzell that a proper case for the application of §§
Page 293 U. S. 278
1, 2, and 7 of the Sherman Anti-Trust Act was not
established."
The Circuit Court of Appeals makes the relation between the
amount of farm journal advertising controlled by respondents to the
total in the entire country a basis of its judgment affirming that
of the district court. But the complaint charges restraint and
attempt to monopolize only in the territory served by respondents'
publications, being five -- or seven, if the Indiana and Dakota
editions are separately counted -- out of a total of 23 papers in
that territory. [
Footnote 1]
Petitioner claims that, during the five-year period, respondents'
advertisements ranged from 44.37 percent to 66.92 percent of the
total in the territory properly to be taken into account. [
Footnote 2] The record
Page 293 U. S. 279
contains no suggestion by respondents or by either court that
petitioner's allegations are not sufficient to charge a violation
of §§ 1 and 2. Its right to recover does not depend upon the
proportion that respondents control of the total farm paper
advertisements in the entire country, and it was not required to
prove that respondents imposed a restraint or attempted
monopolization that would affect all commercial advertisements in
all farm papers wherever published or circulated. The provisions of
§§ 1 and 2 have both a geographical and distributive significance,
and apply to any part of the United States, as distinguished from
the whole and to any part of the classes of things forming a part
of interstate commerce.
Standard Oil Co. v. United States,
221 U. S. 1,
221 U. S. 61.
Our decision in
Standard Oil Co. v. United States,
283 U. S. 163, has
little if any bearing upon the question whether the facts alleged
in the complaint and supported by the evidence in this case
reasonably may be held to constitute a violation of § 1 or § 2.
That was a suit for injunction, § 4, to prevent an alleged
combination from creating a monopoly or restraining interstate
commerce by control of the part of gasoline produced by cracking.
The district court granted some of the relief sought. The case came
here on defendants' appeal. Slight notice of the principal features
of the case is sufficient to distinguish it from the one now before
us. Three producers, owning patents for cracking by which the yield
of gasoline is greatly increased, joined with the owner of similar
patents in agreements for the exchange of patent rights and
division of royalties which were challenged by the government as a
violation of the act, chiefly upon the ground that they enabled the
parties to the agreement to maintain existing royalties. Cracked
gasoline is not distinguishable from the straight run. They are
mixed or sold interchangeably. The output of cracked gasoline was
about 26 percent of the total. The record did not show
Page 293 U. S. 280
the production of cracked by licensees. It was not shown that,
by agreeing on royalties, defendants could control price or supply.
We held that the United States was not entitled to any relief, and
reversed the decree of the district court.
Appalachian Coals, Inc. v. United States, 288 U.
S. 344, was brought here on appeal from a decree of the
district court granting an injunction against a combination of
producers of bituminous coal in a suit by the United States under
the Sherman Act. It may be taken for present purposes that the
defendants' production was 74.4 percent of the total in the
territory in which they operated. But this was only about 12
percent of the production east of the Mississippi. It was shown
that relatively little bituminous coal is consumed in the district
in which the defendants operate mines. They marketed most of their
coal in highly competitive territory. We held, in view of the
condition disclosed by the record, that there was no basis for
concluding that competition anywhere would be injuriously affected
by the cooperative plan adopted by the combination, and reversed
the decree.
The Circuit Court of Appeals, while recognizing that "there are
essential fact differences which make comparisons of different
industries of little value," rested its judgment upon respondents'
arguments based upon these cases. But the abridged statements of
issues there involved and decided are sufficient to show that
respondents' contention reflected inadequate ascertainment and
appreciation of the facts and considerations there held
controlling, and that these decisions turned upon the government's
failure to prove restraint of competition and that they are not in
point here. It results, therefore, that the ground on which the
Circuit Court of Appeals rested its judgment cannot be
sustained.
Page 293 U. S. 281
Petitioner sought this writ upon the ground that the Circuit
Court of Appeals held it bound to prove that respondents effected
such a restraint of interstate commerce as would materially affect
the farm journal advertising business in the entire country, and
misapplied our decisions in the
Standard Oil Company case
and the
Appalachian Coals case. Respondents had
opportunity here to show that, although given on untenable grounds,
the judgment below is right, and should be affirmed. And, if by the
record they could so demonstrate, this Court, if satisfied beyond
doubt that it could do so without prejudice to petitioner, properly
might refrain from reversal.
Deery v. Cray,
5 Wall. 795,
72 U. S. 807;
Vicksburg & Meridian Railroad v. O'Brien, 119 U. S.
99,
119 U. S. 103;
Peck v. Heurich, 167 U. S. 624,
167 U. S. 629.
But respondents suggest nothing to justify the direction of verdict
and judgment in their favor. Certainly, in the absence of a claim
on their part that, conceding the errors exposed by this opinion,
the judgment is right, we will not examine the record to discover
grounds to sustain it.
Cf. Chicago, M. & St.P. Ry. Co. v.
Tompkins, 176 U. S. 167,
176 U. S. 179;
Hammond v. Schappi Bus Line, 275 U.
S. 164,
275 U. S. 170
et seq. We intimate no opinion whether, upon the question
of restraint or monopoly or upon the question of injury to
petitioner or its business, the evidence is sufficient to warrant a
verdict in its favor.
The judgment of the Circuit Court of Appeals should be reversed,
and the case remanded to the district court with directions that
petitioner be granted a new trial.
So ordered.
[
Footnote 1]
The petition contains the following computation to show the
number and type of farm papers published in the eight states in
which petitioner's and respondents' papers principally
circulate:
------------------------------------------------------------
Total Number Vocational or
of Papers General Technical
------------------------------------------------------------
Illinois . . . . . . . 36 5 31
Indiana. . . . . . . . 10 4 6
Iowa . . . . . . . . . 10 5 5
Minnesota. . . . . . . 8 2 6
Nebraska . . . . . . . 3 1 3
North Dakota . . . . . 1 0 1
South Dakota . . . . . 1 1 0
Wisconsin. . . . . . . 8 5 3
-- -- --
Total . . . . . . 77 23 54
------------------------------------------------------------
[
Footnote 2]
Petitioner's computation follows:
-------------------------------------------------------
Total Lineage Per Cent of
Total Lineage Covered by Respondents'
Carried by all Respondents' Lineage to
Papers Papers Total
-------------------------------------------------------
1928 . . . . 7,490,806 3,323,256 44.37
1929 . . . . 6,844,629 3,235,364 47.26
1930 . . . . 5,172,535 2,980,963 57.63
1931 . . . . 3,562,695 2,207,650 61.97
1932 . . . . 2,151,376 1,439,753 66.92
-------------------------------------------------------