Pevely Dairy Co. v. United States

• Citation: 178 F.2d 363
• Decision Date: 13 December 1949
• Docket Number: 13790.,No. 13789,13789
• Parties: PEVELY DAIRY CO. v. UNITED STATES. ST. LOUIS DAIRY CO. v. UNITED STATES.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

178 F.2d 363 (1949)

PEVELY DAIRY CO. v. UNITED STATES.

ST. LOUIS DAIRY CO. v. UNITED STATES.

Nos. 13789, 13790.

United States Court of Appeals Eighth Circuit.

December 13, 1949.

Jacob M. Lashly, St. Louis, Mo. (Arthur V. Lashly, Paul B. Rava, and Lashly, Lashly, Miller & Clifford, St. Louis, Mo., on the brief), for appellant St. Louis Dairy Co.

Wm. H. Allen, St. Louis, Mo., and James A. Finch, Cape Gerandeau, Mo. (E. C. Hartman, St. Louis, Mo., on the brief), for appellant Pevely Dairy Co.

Walter D. Murphy, and John R. Niesley, Washington D. C., Special Attorneys, Department of Justice (George B. Haddock, Special Assistant to the Attorney General, Herbert A. Bergson, Assistant Attorney General, and Drake Watson, United States Attorney, St. Louis, Mo., on the brief), for appellee.

Before GARDNER, Chief Judge, and THOMAS and RIDDICK, Circuit Judges.

GARDNER, Chief Judge.

Appellants, Pevely Dairy Company and St. Louis Dairy Company, were convicted for engaging in a conspiracy to fix wholesale and retail milk prices on Grade A regular milk in the St. Louis area, within the State of Missouri, in violation of Section 1 of the Sherman Anti-Trust Act, 15 U.S.C. A. § 1. These two dairy companies, sometimes referred to in the record as handlers, were indicted with six individuals who were officers or employees of the dairy companies. The indictment charged that the corporate defendants, as handlers, sold and distributed approximately 63 per cent of the fluid milk consumed in the St. Louis area, and that for a period of approximately ten years prior to the return of the indictment the defendants had engaged in an unlawful conspiracy to fix uniform and noncompetitive retail and wholesale prices of fluid milk; that the conspiracy consisted of an agreement and concert of action in that the corporate defendants would charge uniform and non-competitive retail and wholesale prices for fluid milk and that neither corporate defendant would make any change in price until an agreement had been reached that the other corporate defendant would make an identical change; that the corporate defendants on the several dates set out in the indictment, covering a period from July 3, 1946, to January 27, 1948 (which period, by supplemental bill of particulars, was extended to include changes in April, 1942, and June 30, 1946, and seven other such changes between April, 1938 and April 1, 1942), fixed uniform prices for fluid milk, both at wholesale and at retail; that the result of the conspiracy was to increase, stabilize and otherwise control and fix prices to consumers throughout the St. Louis area of milk produced in the States of Illinois and Missouri and shipped into the St. Louis area, and to suppress competition between the corporate defendants; that more than one-half of the fluid milk sold by the corporate defendants in the St. Louis area was produced in the State of Illinois and shipped into the St. Louis area; that fluid milk is perishable by nature, can not be stored, and must reach the consumer within a short time after production, and that from day to day there is a continuous flow of milk from producers in the States of Illinois and Missouri to retail and wholesale purchasers in the St. Louis area.

The corporate defendants, as well as the individual defendants, filed motions to dismiss on the ground that the indictment did not charge an offense under the laws of the United States, and particularly under Section 1 of the Sherman Anti-Trust Act, in that the restraints alleged were in intrastate commerce because the raw milk came to rest and was intermingled in Missouri before the corporate defendants processed and converted it into Grade A milk, and that the indictment failed to charge that the alleged price control constituted a direct and substantial burden upon interstate commerce. These motions to dismiss were overruled. The defendants filed motions for a bill of particulars which the court in part sustained, and in the bill of particulars furnished by the government it was recited that the government had no direct evidence of an express written or oral agreement among the defendants but that it would rely upon evidence from which an oral agreement might be implied.

Their motions to dismiss having been overruled, all defendants entered pleas of not guilty. At the conclusion of the government's evidence, and again at the conclusion of all the testimony, the defendants interposed motions for judgment of acquittal. The ruling of the court on these motions was reserved. The jury returned a verdict of guilty as to the corporate defendants and acquitted all the individual defendants. Subsequent to the verdict the corporate defendants filed their motions for judgment of acquittal notwithstanding the verdict or in the alternative for a new trial, which motions were overruled by the court and the corporate defendants were adjudged guilty and sentenced to pay fines of $5,000 each.

The Pevely Dairy Company and the St. Louis Dairy Company are the largest milk distributors in the St. Louis area. They are engaged in the selling of fluid milk, butter, eggs and various milk products in the City of St. Louis. There are approximately thirty-five dairies which sell milk products in this marketing area. The two corporate defendants handle approximately 63 per cent of the fluid milk in the St. Louis area. This milk was delivered by producers to the dairies in St. Louis by the producers' trucks or by independent truckers employed by the producers and the price paid by the dairies was an f. o. b. price at their plants in St. Louis, and any milk which did not meet the requirements of the St. Louis milk ordinance was rejected and remained the property of the producers. When the milk was received at the plants of the dairy companies at St. Louis it was inspected, cooled, pasteurized, bottled and capped before it was ready for sale and delivery. Further facts will be developed in the course of this opinion.

The appellants have taken separate appeals but their appeals have been submitted upon a single record and will be considered in one opinion. Reversal is sought on substantially the following grounds: (1) The indictment fails to charge a conspiracy in violation of the Sherman Anti-Trust Act in that the alleged restraints were in intrastate commerce because the raw milk transported from Illinois came to rest, was intermingled with milk produced in Missouri, processed and converted into Grade A milk before it was sold, and in that the indictment charges that appellants were regulating milk prices wholly in the State of Missouri, and fails to allege that such alleged price control constituted a direct and substantial burden upon interstate commerce. (2) The government's testimony was insufficient to sustain a conviction for conspiracy, the evidence being wholly circumstantial and being as consistent with innocence as with guilt; and hence, the motions for acquittal at the close of the government's case should have been sustained. (3) The court erred in the admission of certain evidence. (4) The individual defendants who were the agents of the appellants and the immediate actors in the alleged conspiracy having been acquitted by the jury, the verdict of guilty as to appellants can not stand.

The Sherman Anti-Trust Act, so far as here material, reads as follows: "Sec. 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal * * *. Every person who shall make any contract or engage in any combination or conspiracy hereby declared * * * illegal shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding $5,000 or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court."

Appellants in effect urge two grounds for their attack on the indictment. It is urged that the alleged restraint and conspiracy has to do only with the distribution of milk in the State of Missouri, and hence, this being an intrastate transaction, is not the subject of congressional control. All the acts charged against the appellants were alleged to have been committed within the State of Missouri. The indictment charged, however, that the alleged conspiracy "has had the effect, as intended by the defendants, of increasing, stabilizing, and otherwise controlling and fixing prices to consumers and other purchasers of fluid milk sold by the corporate defendants throughout the St. Louis area of fluid milk produced in the States of Illinois and Missouri and shipped from said States into said area, and of suppressing competition between the defendants * * * and has had the effect thereby of restraining the hereinbefore described interstate trade and commerce in fluid milk." The indictment, in prior paragraphs, charged that the fluid milk sold and distributed in St. Louis was produced in the States of Illinois and Missouri and that the milk produced in Illinois was transported into St. Louis. The mere fact that the alleged conspiracy had to do solely with acts to be performed in the State of Missouri and was limited to the matter of the distribution of milk and the fixing of prices within the State of Missouri, is not necessarily determinative of the issue. If intrastate transactions affect interstate commerce they may properly be the subject of federal legislation. Swift & Company v. United States, 196 U.S. 375, 25 S.Ct. 276, 49 L.Ed. 518; United States v. Women's Sportswear Mfg. Ass'n, 336 U. S. 460, 69 S.Ct. 714; Standard Oil Company of California and Standard Stations v. United States, 337 U.S. 293, 69 S.Ct. 1051. In United States v. Women's Sportswear Mfg. Ass'n, supra, it is, among other things, said 336 U.S. 460, 69 S.Ct. 716, "The trial court appears to have dismissed the case chiefly on the ground that the accused Association and its...