Tilden v. Quaker Oats Co.
| Decision Date | 23 July 1924 |
| Docket Number | No. 3129.,3129. |
| Citation | 1 F.2d 160 |
| Parties | TILDEN et al. v. QUAKER OATS CO. et al. |
| Court | U.S. Court of Appeals — Seventh Circuit |
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Albert G. Welch, of Chicago, Ill., for plaintiffs in error.
John M. Zane, of Chicago, Ill., for defendants in error.
Before BAKER and EVANS, Circuit Judges, and GEIGER, District Judge.
GEIGER, District Judge (after stating the facts as above).
Although the declaration contains several counts, the foregoing statement presents the questions arising upon this writ of error. The matters comprehended may be grouped as follows:
(a) The general historical allegations respecting a confederation, combination, pool, monopoly, or attempted monopoly, in the business of oatmeal products, etc. They deal with a situation said to have existed many years prior to the advent of the Cereal Company.
(b) General allegations or charges that "the defendants" combined, confederated, conspired, etc., to restrain interstate commerce in oatmeal products and by-products or to create a monopoly.
(c) General allegations that the defendants entered into "certain agreements" to effectuate the purpose noted in (b) supra.
(d) Allegations of misconduct or misfeasance on the part of certain defendants, officers of the Cereal Company; e. g., the diversion of funds for "illegal salaries," "illegal" dividends, loans to the Cereal Company at high rates of interest, and upon which "extortionate commissions" were exacted.
(e) Allegations respecting the making of the contract of June 22, 1911, between the Cereal Company and the Quaker Oats Company.
Of these groups of allegations it may be observed that mere general charges of combination or conspiracy avail nothing, unless and until there is averred the commission of an act or acts denounced by the statute as conferring a right to ensuing damage. Conceding, therefore, that the declaration by mere general allegation shows the existence — prior to the advent of the Cereal Company — of some sort of a confederation or combination to monopolize or restrain interstate trade, the plaintiff is not helped thereby since, as shown by the declaration, the Cereal Company came into existence, acquired, and for a long period maintained, a position as a competitor. Hence the necessity of averring an act or acts, prohibited by statute, thereupon committed, which, upon commission, injured the business of the Cereal Company, and which then availed it, and now avails its successor or representative, as a basis for claiming the damage shown to have ensued. So, too, the allegations respecting the embarrassment of the Cereal Company, the payment of "illegal" salaries, the declaration of "illegal" dividends, the making of loans at high rates of interest, the exaction of "commissions" by an official of such company for "procuring such loans," are of no relevancy, in point of pleading, to support a right of action under the statute. If true, they disclose acts of official delinquency occurring within the corporation — not germane to the statutory bases — and cannot be made more relevant or germane, nor given other color, by introducing them under averments that the acts were committed "in furtherance of the said conspiracy," or that the defendants "taking advantage" thereof, or the consequences thereof, committed other acts. So the case is reduced to the allegations dealing with the contract of June 22, 1911 (e supra); and this necessitates consideration of such contract (1) standing alone, or (2) as a consequence or step in an alleged conspiracy, or (3) in the light of its own alleged consequences.
If, in a competitive business, one agrees to sell out the whole, or part thereof, and its incidentals, the law does not contemplate that he bargains for such advantages only as are certain of actual receipt and fruition; that he does not bargain for consequences which may prove disadvantageous or disappointing in the future; that therefore he may accept and receive the benefits and endeavor to treat ensuing burdens, disadvantages, or disappointments as injury to his business, causing legal damage, simply because by reason of his own participation the act has resulted in restricting the status hitherto held by him as a competitor. Section 7 of the Anti-Trust Act (Comp. St. § 8829) does not intend that one competitor may conspire with another, to the end that each — if disaster overtake one or all — may insist that the others did him an injury and should stand for damage. The section does not and cannot serve as a means of disavowing, yet holding benefits arising upon, agreements formally and deliberately entered into.
The drafter of the pleading before us appears to have appreciated these elementals, and seeks to avoid their application thus: The agreement was entered into as a formal corporate act; the officers sanctioned and signed upon authorization or ratification by shareholders. But — so it is said — the latter did not know that, at the stockholders' meetings, the votes cast by proxy were to be cast favorably to the transaction now complained of; and all this when, as averred, the corporation had become "incapable (by `reason of the various unlawful agreements and acts * * * in this count mentioned') of further carrying on its aforesaid interstate trade and commerce," and also when defendants "as directors of said Cereal Company" had resolved that in "the judgment of its Cereal Company's board of directors" the property described "was no longer useful or necessary to said Cereal Company, and could not be advantageously used in its business, or in the proper and judicious operation, management and maintenance thereof." So at the threshold plaintiff appreciates that the contract — executed and carried out with the conceded formality and express assent detailed — evidences corporate assent to and participation in an act, admitted to be the sole act, or the culminating one of a series, without which no claim of injury or damage is assertable. Therefore the declaration is made to disclose a conception of means of evading this assent to avoid what, under familiar principles, bars...
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