Chattanooga Foundry Pipe Works v. City of Atlanta

• Citation: 203 U.S. 390,27 S.Ct. 65,51 L.Ed. 241
• Decision Date: 03 December 1906
• Docket Number: No. 94,94
• Parties: CHATTANOOGA FOUNDRY & PIPE WORKS and South Pittsburg Pipe Company, Plffs. in Err., v. CITY OF ATLANTA
• Court: United States Supreme Court

203 U.S. 390

27 S.Ct. 65

51 L.Ed. 241

CHATTANOOGA FOUNDRY & PIPE WORKS and South Pittsburg Pipe Company, Plffs. in Err.,

v CITY OF ATLANTA.

No. 94.

Argued November 3 and 12, 1906.

Decided December 3, 1906.

Messrs. Frank Spurlock and Foster V. Brown for plaintiffs in error.

[Argument of Counsel from pages 391-394 intentionally omitted] Messrs. George Westmoreland, Churchill P. Goree, Linton A. Dean, and J. L. Foust for defendant in error.

Mr. Justice Holmes delivered the opinion of the court:

This is an action by the city of Atlanta (Georgia) against two Tennessee corporations, members of the trust or combination held unlawful in Addyston Pipe & Steel Co. v. United States, 175 U. S. 211, 44 L. ed. 136, 20 Sup. Ct. Rep. 96. The object of the suit is to recover threefold damages for alleged injury to the city in its business or property, under § 7 of the act of July 2, 1890, chap. 647 (26 Stat. at L. 209, U. S. Comp. Stat. 1901, p. 3202). The alleged injury is that the city, being engaged in conducting a system of waterworks, and wishing to buy iron water pipe, was led, by reason of the illegal arrangements between the members of the trust, to purchase the pipe from the Anniston Pipe & Foundry Company, an Alabama corporation, at a price much above what was reasonable or the pipe was worth. The purchase was made after a simulated competition, at a price fixed by the trust, and embracing a bonus to be divided among the members. The plaintiffs in error demurred to the declaration, and pleaded not guilty, and that the action accrued more than one year and more than three years before the suit was brought, relying upon §§ 2772 and 2773 of the Code of Tennessee, the eastern district of Tennessee being the district in which the suit was brought. The demurrer to the declaration was overruled and the plaintiff had a verdict and judgment in the circuit court. The verdict was for the difference between the price paid and the market or fair price that the city would have had to pay under natural conditions had the combination been out of the way, together with an attorney's fee. The judgment trebled the damages. It was affirmed by the circuit court of appeals, the plaintiffs in error having saved their rights at every stage. The discussions of the law took place before the jury trial was reached. They will be found in 64 L.R.A. 721, 61 C. C. A. 387, 127, Fed. 23, and 101 Fed. 900. For our purposes it seems unnecessary to state the case at greater length.

The facts gave rise to a cause of action under the act of Congress. The city was a person within the meaning of § 7 by the express provision of § 8. It was Injured in its property, at least, if not in its business of furnishing water, by being led to pay more than the worth of the pipe. A person whose property is diminished by a payment of money wrongfully induced is injured in his property. The transaction which did the wrong was a transaction between parties in different states, if that be material. The fact that the defendants and others had combined with the seller led to the excessive charge, which the seller made in the interest of the trust by arrangement with its members, and which the buyer was induced to pay by the semblance of competition, also arranged by the members of the trust. One object of the combination was to prevent other producers than the Anniston Pipe & Foundry Company, the seller, from competing in sales to the plaintiff. There can be no doubt that Congress had power to give an action for damages to an individual who suffers by breach of the law. W. W. Montague & Co. v. Lowry, 193 U. S. 38, 48 L. ed. 608, 24 Sup. Ct. Rep. 307. The damage complained of must almost or quite always be damage in property, that is, in the money of the plaintiff, which is owned within some particular state. In other words, if Congress had power to make the acts which led to the damage illegal, it could authorize a recovery for the damage, although the latter was suffered wholly within the boundaries of one state. Finally, the fact that the sale was not so connected in its terms with the unlawful combination as to be unlawful (Connolly v. Union Sewer Pipe Co. 184 U. S. 540, 46 L. ed. 679, 22 Sup. Ct. Rep. 431) in no way contradicts the proposition that the motives and inducements to make it were so affected by the combination as to constitute a wrong. In most cases where the result complained of as springing from a tort is a contract, the contract is lawful, and the tort goes only to the motives which led to its being made, as when it is induced by duress or fraud.

The limitation of five years in Rev. Stat. § 1047, U. S. Comp. Stat. 1901, p. 727, to any 'suit or prosecution for any penalty or forfeiture, pecuniary or otherwise, accruing under the laws of the United States,' does not apply. The construction of the phrase 'suit for a penalty,' and the reasons for that construction, have been stated so fully by this court that it is not necessary to repeat them. Indeed, the proposition...