On a writ of error under the Criminal Appeals Act, this Court
must confine itself, to the question of the construction of the
statute involved in the decision of the district court, accepting
that court's interpretation of the indictment. P.
250 U. S.
301.
Page 250 U. S. 301
In the absence of any intent to create or maintain a monopoly,
the Sherman Act doe not prevent a manufacturer engaged in a private
business from announcing in advance the prices at which his good
may be resold and refusing to deal with wholesaler and retailers
who do not conform to such price. P.
250 U. S.
307.
As the court interpret the district court's opinion, the
indictment in this case was interpreted as not charging the
defendant with selling to dealers under agreements obligating them
not to resell at prices other than those fixed by defendant. P.
250 U. S. 306.
Dr. Miles Medical Co. v. Park & Sons Co., 220 U.
S. 373, distinguished.
253 F. 522 affirmed.
The case is stated in the opinion.
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. 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
Page 250 U. S. 302
decision."
United States v. Carter, 231 U.
S. 492,
231 U. S. 493;
United States v. Miller, 223 U. S. 599,
223 U. S.
602.
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 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 F. 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:
"During the aforesaid period of time, within the said Eastern
district of Virginia and throughout the United States, the
defendant knowingly and unlawfully created and engaged in a
combination with said wholesale and retail dealers, in the Eastern
district of Virginia and throughout the United States, for the
purpose and with the effect of procuring adherence on the part of
such dealers (in reselling such products sold to them aforesaid) to
resale prices fixed by the defendant, and of preventing
Page 250 U. S. 303
such dealers from reselling such products at lower prices, thus
suppressing competition amongst such wholesale dealers, and amongst
such retail dealers, in restraint of the aforesaid trade and
commerce among the several states, in violation of the act entitled
'An act to protect trade and commerce against unlawful restraints
and monopolies,' approved July 2, 1890."
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:
"By reason of the foregoing, wholesale dealers in the aforesaid
products of the defendant in the Eastern district of Virginia and
throughout the United States, with few exceptions, resold at
uniform prices fixed by the defendant, the aforesaid products, sold
to them by the defendant, and refused to resell such products at
lower prices to retail dealers in the state where the respective
wholesale dealers did business and in other states. For the same
reason, retail dealers in the aforesaid products of the defendant
in the Eastern district of Virginia and throughout the United
States resold at uniform prices fixed by
Page 250 U. S. 304
the defendant, the aforesaid products, sold to them by the
defendant and by the aforesaid wholesale dealers, and refused to
sell such products at lower prices to the consuming public in the
states where the respective retail dealers did business and in
other states. Thus, competition in the sale of such products, by
wholesale dealers to retail dealers, and by retail dealers to the
consuming public, was suppressed, and the prices of such products
to the retail dealers and to the consuming public in the Eastern
district of Virginia and throughout the United States were
maintained and enhanced."
In the course of its opinion the trial court said:
"No charge is made that any contract was entered into by and on
the part of the defendant, and any of its retail customers, in
restraint of interstate trade and commerce, the averment being, in
effect, that it knowingly and unlawfully created and engaged in a
combination with certain of its wholesale and retail customers to
procure adherence on their part, in the sale of its products sold
to them, to resale prices fixed by the defendant, and that in
connection therewith, such wholesale and retail customers gave
assurances and promises which resulted in the enhancement and
maintenance of such prices and in the suppression of competition by
wholesale dealers and retail dealers and by the latter to the
consuming public."
"
* * * *"
"In the view taken by the court, the indictment here fairly
presents the question of whether a manufacturer of products shipped
in interstate trade, is subject to criminal prosecution under the
Sherman Act for entering into a combination in restraint of such
trade and commerce because he agrees with his wholesale and retail
customers upon prices claimed by them to be fair and reasonable at
which the same may be resold and
Page 250 U. S. 305
declines to sell his products to those who will not thus
stipulate as to prices. This, at the threshold, presents for the
determination of the court how far one may control and dispose of
his own property -- that is to say, whether there is any limitation
thereon if he proceeds in respect thereto in a lawful and
bona
fide manner. That he may not do so, fraudulently, collusively,
and in unlawful combination with others may be conceded.
Eastern States Retail Lumber Dealers' Association v. United
States, 234 U. S. 600,
234 U. S.
614. But it by no means follows that, being a
manufacturer of a given article, he may not, without incurring any
criminal liability, refuse absolutely to sell the same at any
price, or to sell at a named sum to a customer with the
understanding that such customer will resell only at an agreed
price between them, and, should the customer not observe the
understanding as to retail prices, exercise his undoubted right to
decline further to deal with such person."
"
* * * *"
"The pregnant fact should never be lost sight of that no
averment is made of any contract or agreement having been entered
into whereby the defendant, the manufacturer, and his customers,
bound themselves to enhance and maintain prices further than is
involved in the circumstances that the manufacturer, the defendant
here, refused to sell to persons who would not resell at indicated
prices, and that certain retailers made purchases on this
condition, whereas, inferentially, others declined so to do. No
suggestion is made that the defendant, the manufacturer, attempted
to reserve or retain any interest in the goods sold, or to restrain
the vendee in his right to barter and sell the same without
restriction. The retailer, after buying, could, if he chose, give
away his purchase or sell it at any price he saw fit, or not sell
it at all, his course in these respects being affected only by
Page 250 U. S. 306
the fact that he might by his action incur the displeasure of
the manufacturer, who could refuse to make further sales to him, as
he had the undoubted right to do. There is no charge that the
retailers themselves entered into any combination or agreement with
each other, or that the defendant acted other than with his
customers individually."
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)
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:
"The retailer, after buying, could, if he chose, give away his
purchase or sell it at any price he saw fit, or not sell it at all,
his course in these respects being affected only by the fact that
he might by his action incur the displeasure of the manufacturer,
who could refuse to make further sales to him, as he had the
undoubted right to do."
And we
Page 250 U. S. 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,
166 U. S.
320.
"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,
234 U. S. 614.
See also Standard Oil Co. v. United States, 221 U. S.
1,
221 U. S. 56;
United States v. American Tobacco Co., 221 U. S.
106,
221 U. S. 180;
Boston Store of Chicago v. American Graphophone Co.,
246 U. S. 8. In
Dr. Miles Medical Co. v. Park & Sons Co., supra, the
unlawful
Page 250 U. S. 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
Affirmed.