184 U.S. 540 (1902), 48, Connolly v. Union Sewer Pipe Company

Docket Nº:No. 48
Citation:184 U.S. 540, 22 S.Ct. 431, 46 L.Ed. 679
Party Name:Connolly v. Union Sewer Pipe Company
Case Date:March 10, 1902
Court:United States Supreme Court
 
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Page 540

184 U.S. 540 (1902)

22 S.Ct. 431, 46 L.Ed. 679

Connolly

v.

Union Sewer Pipe Company

No. 48

United States Supreme Court

March 10, 1902

Argued April 22-23, 1901

ERROR TO THE CIRCUIT COURT FOR THE

NORTHERN DISTRICT OF ILLINOIS

Syllabus

If a claim is made in the circuit court that a state enactment is invalid under the Constitution of the United States, and that claim is sustained or rejected, this Court may review the judgment at the instance of the unsuccessful party.

If the alleged combination in this case was illegal, it would not follow that they could, at common law, refuse to pay for pipes bought for them under special contracts.

The contracts between the plaintiff and the respective defendants were collateral to the agreement between the plaintiff and other corporations, etc., whereby an illegal combination was formed for the sale of sewer pipe.

The first special defense in this case, based alone upon the principles of the common law, was properly overruled.

The special defense, based upon the Act of Congress of July 2, 1890, 26 Stat. 209, was also properly rejected. That act does not declare illegal or void any sale made by such combination or its agents of property acquired for the purpose of being sold, such property not being at the time in the course of transportation from one state to another, or to a foreign country, and the buyer could not refuse to comply with his contract of purchase upon the ground that the seller was an illegal combination, which might be restrained or suppressed in the mode prescribed by the act of Congress.

The case is stated in the opinion of the court.

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HARLAN, J., lead opinion

MR. JUSTICE HARLAN delivered the opinion of the Court.

The Union Sewer Pipe Company -- a corporation organized under the laws of Ohio and doing business in Illinois -- brought its action against Thomas Connolly, a citizen of Illinois, in the Circuit Court of the United States for the Northern District of Illinois, on two negotiable promissory notes both executed at Chicago by the defendant; one, dated December 15, 1894, the other dated January 15, 1895, and each payable to the order of the plaintiff corporation ninety days after date at the First National Bank of Chicago.

These notes were given on account of the purchase by the defendant from the plaintiff of sewer pipe commonly known as standard Akron pipe at prices agreed upon between the parties.

The pipe company also brought an action in the same court against William E. Dee, a citizen of Illinois, upon an open account for $2,389.26, the value at agreed prices of certain pipe purchased by him from the plaintiff in June, 1896. The plaintiff supplied the pipe under a written contract executed between it and the defendant in Illinois under date of August, 1895.

Each of the defendants filed a plea of the general issue, with notice of special defenses and of set-off.

The special defenses in each case were substantially the same. The notice in the Connolly case was that the defendant on the trial of the action would rely on these special matters:

First. That the plaintiff is, and at all times since about the first day of January, 1893, has been, a trust or combination of the capital, skill, and acts of divers persons and corporations carrying on a commercial business in the States of Ohio and Illinois and between said states and elsewhere in the United States of America, and organized for the express purpose of unlawfully and contrary to the common law creating and carrying out restrictions in trade, to-wit, in the trade of buying, selling, and otherwise dealing in certain articles of merchandise, to-wit, sewer, and drainage pipes, and also for the express purpose of

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unlawfully and contrary to the common law limiting the production of said articles of merchandise and increasing the market price thereof, and also for the express purpose of unlawfully and contrary to the common law preventing competition in the manufacture, making, transportation, sale, or purchase of said articles of commerce; also for the express purpose of unlawfully and contrary to the common law fixing standards or figures whereby the prices of said articles of merchandise intended for sale, use, and consumption in this state should be controlled and established, and also for the express purpose of unlawfully and contrary to the common law being a pretended agency whereby the sale of said articles of commerce should and might be covered up and made to appear to be for the original vendors thereof, and so as to enable the original vendors or manufacturers thereof to control the wholesale and retail price of such articles of commerce after the title thereto had passed from such vendors or manufacturers, and for the further express purpose of unlawfully and contrary to the common law making and entering into and carrying out a certain contract or certain contracts by which the several persons or corporations forming the plaintiff, or being the pretended stockholders thereof, to they have agreed to keep the prices of said of, or transport said articles of commerce below certain common standard figures or card or list prices in excess of the true market values thereof, and by which they have agreed to keep the prices of said articles of commerce at certain fixed or graduated figures, and by which they have established certain settled prices of said articles of commerce between themselves and others, so as to preclude a free and unrestricted competition among themselves and others in the sale and transportation of said articles of commerce, and by which they have agreed to pool, combine, and unite any interests they may have in connection with the sale and transportation of said articles of commerce so that the prices [22 S.Ct. 433] thereof may effect advantageously to themselves; that all of the claims of the plaintiff against the defendant in this action arise wholly out of, and are in respect of, sales of said articles of merchandise made between the 1st day of January, A.D. 1893, and the 1st day of March, 1896, to this defendant by

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the plaintiff in the ordinary course of its business as such a trust or combination acting as aforesaid, and that this action is brought to recover the alleged price thereof and for no other purpose.

Secondly. That the plaintiff is, and at all times since the 1st day of January, 1893, was, a combination in the form of a trust, in restraint of trade and commerce among the several states, and doing business as such throughout the United States and between the States of Ohio and Illinois, contrary to the provisions of an Act of Congress of date of July 2, 1890, and entitled "An Act to Protect Trade and Commerce against Unlawful Restraints and Monopolies," and that this action is brought solely to recover the price of articles of merchandise, to-wit, sewer and drainage pipes, sold to the defendant by the plaintiff, then and there acting and doing business as such a combination, as aforesaid, in violation of the provisions of said act.

Thirdly. That the plaintiff is, and at all times since the 1st of January, 1893, was, a trust doing business as such in the State of Illinois and elsewhere, contrary to the provisions of an act of the Legislature of the State of Illinois entitled

An Act to Define Trusts and Conspiracies against Trade, Declaring Contracts in Violation of This Provision Void, and Making Certain Acts and Violations Thereof Misdemeanors, and Prescribing Punishment Thereof and Matters Connected Therewith, Approved June 20, 1893, in Force July 1, 1893;

that this action is brought solely to recover the price of articles of merchandise, to-wit, sewer and drainage pipes, sold to the defendant by the plaintiff, then and there acting and doing business in violation of the provisions of said act, and that the defendant hereby pleads said act in defense to this action and the whole thereof.

The set-offs claimed by Connolly were: treble the amount of the actual damages sustained and allowed by the act of Congress of July 2, 1890, c. 647, known as the Sherman Anti-Trust Act, $56,970.44; actual damages sustained by reason of the violation by the plaintiff of the provisions of the Illinois statute of July 1, 1893, $17,323.48, and for money had and received by plaintiff of defendant contrary to law, $17,323.48.

The set-offs claimed by Dee were of like character, but of larger amounts.

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Both cases were, by agreement, submitted to the same jury, and were treated as one consolidated case. At the trial, the defendants respectively asked leave to amend their notices of special defenses, but leave was denied.

The circuit court disallowed both the first and second of the above special defenses, and in respect of the third, its decision was that the Illinois Trust Statute of 1893 was in violation of the Constitution of the United States. It consequently directed the jury to find a verdict for the plaintiff in each case, in the Connolly case for the amount of the two notes sued on, in the Dee case for the amount of the plaintiff's open accounts against him. Verdicts having been returned as directed, and a motion for new trial in one case, and motions for new trial and in arrest of judgment in the other, having been overruled, judgments were entered on the verdicts.

1. The defendant in error insists that these cases should have gone to the circuit court of appeals, and has moved on that ground that the writ of error be dismissed. The defense in each case was based in part on the Illinois statute of 1893. The plaintiff insisted at the trial that that statute was in violation of the Constitution of the United States, and its position was sustained by the circuit court. There have...

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