Chrysler Corporation v. United States, 1036

• Decision Date: 01 June 1942
• Docket Number: No. 1036,1036
• Citation: 86 L.Ed. 1668,316 U.S. 556,62 S.Ct. 1146
• Parties: CHRYSLER CORPORATION et al. v. UNITED STATES
• Court: U.S. Supreme Court

316 U.S. 556

62 S.Ct. 1146

86 L.Ed. 1668

CHRYSLER CORPORATION et al.

v UNITED STATES.

No. 1036.

Argued May 1, 4, 1942.

Decided June 1, 1942.

On Appeal from the District Court of the United States for the Northern District of Indiana.

Messrs. Nicholas Kelley, of New York City, and William D. Donnelly, of Washington, D.C., for appellants.

Mr. Albert Holmes Baldridge, of Oklahoma City, Okl., for appellee.

Mr. Justice BYRNES delivered the opinion of the Court.

On May 27, 1938, an indictment was returned against appellants (rfferred to hereafter as Chrysler) and Commercial Credit Company and certain subsidiaries of the latter in the District Court for the Northern District of Indiana. Two similar indictments were returned on the same day, one against Ford Motor Company and certain finance companies affiliated with it and the other against General Motors Corporation and General Motors Acceptance Corporation, its subsidiary. The gist of each of these indictments was that the automobile manufacturer had combined and conspired with its affiliated finance company or companies to restrain trade and commerce in the wholesale and retail sale and financing of its automobiles, in violation of the Sherman Act.¹

During the ensuing months Chrysler and Ford reached an agreement with the government that the indictments against them would be quashed and consent decrees entered. Consequently, on November 7, 1938 bills of equity were filed against Chrysler and Ford praying for injunctions against the acts complained of. Answers were filed² and on November 15, 1938 the consent decrees were entered.

The lengthy decree against Chrysler need not be described in detail.³ Paragraph 6 imposed numerous specific restraints upon discriminatory practices by Chrysler in favor of Commercial Credit Company. Paragraph 7 imposed correlative restraints upon Commercial Credit Company in its dealings with Chrysler. Paragraph 12A contained alternative provisions depending upon the outcome of the then still pending criminal proceedings against General Motors. It provided: (1) that if those proceedings should not result in conviction every provision of this consent decree against Chrysler should be suspended until such time as a substantially identical decree should be obtained against General Motors; or (2) that upon conviction of General Motors in the criminal proceedings or upon the entry of a decree in a civil action against General Motors or upon January 1, 1940—whichever should occur first—Chrysler should be free of all restraints imposed by paragraph 6 to the extent that substantially identical restraints had not been imposed upon General Motors by the verdict of guilty or by the civil decree and until such restraints were imposed.

The question before us concerns paragraph 12, which is separate and distinct from paragraph 12A. Paragraph 12 forbade Chrysler to 'make any loan to or purchase the securities of' Commercial Credit Company or any other credit company. It then provided: 'It is an express condition of this decree that notwithstanding the provisions of the preceding paragraph of this paragraph 12 and of any other provisions of this decree, if an effective final order or decree not subject to further review shall not have been entered on or before January 1,1941, requiring General Motors Corporation permanently to divest itself of all ownership and control of General Motors Acceptance Corporation and of all interest therein, then and in the event, nothing in this decree shall preclude the manufacturer (Chrysler) from acquiring and retaining ownership of and/or control over or interest in any finance company, or from dealing with such finance company and with the dealers in the manner provided in this decree or in any order or modification or suspension thereof entered pursuant to paragraph 12a * * *. (emphasis added)'.

Affiliation between Chrysler and Commercial Credit Company or another finance company was thus singled out for special treatment in paragraph 12. The various restraints imposed by paragraphs 6 and 7 were subject to termination upon the contingencies described in paragraph 12A, but the prohibition against affiliation was subject to expiration upon the distinct and different contingency described in paragraph 12, viz., the entry of 'an effective final order or decree not subject to further review * * * on or before January 1, 1941, requiring General Motors Corporation permanently to divest itself of all ownership and control of General Motors Acceptance Corporation and of all interest therein * **.'

Jurisdiction of the cause was retained by the District Court, in paragraph 14, for the purpose of enabling the parties to apply at any time 'for such further orders and directions as may be necessary or appropriate in relation to the construction of or carrying out of this decree' or 'for the modification thereof'.

The criminal proceedings against General Motors resulted in conviction of the corporation on November 17, 1939. United States v. General Motors Corp., 7 Cir., 121 F.2d 376. General Motors appealed to the Circuit Court of Appeals for the Seventh Circuit. On May 1, 1941 that Court affirmed the conviction and on July 2, 1941 denied rehearing. A petition for certiorari was denied on October 13, 1941. 314 U.S. 618, 62 S.Ct. 105, 86 L.Ed. —-. A petition for rehearing was denied on November 10, 1941. 314 U.S. 707, 62 S.Ct. 178, 86 L.Ed. —-.

Meantime, a civil suit for an injunction had been instituted by the government against General Motors on October 4, 1940 in the District Court for the Northern District of Illinois. On October 26, 1940 the government agreed to an extension of time to answer to January 20, 1941. This extension of time rendered it impossible for the government to obtain 'an effective final order or decree' against General Motors before January 1, 1941, as required by paragraph 12 of the consent decree against Chrysler. Accordingly, on December 17, 1940, the government filed a motion in the District Court in Indiana asking that paragraph 12 of the consent decree against Chrysler be modified by substituting 'January 1, 1942' for 'January 1, 1941'. Chrysler opposed this motion, but on December 21, 1940 an order was entered changing the date as requested. Chrysler appealed to this Court from the order of modification, but the appeal was dismissed on December 8, 1941 for want of a a quorum of Justices qualified to sit (314 U.S. 583, 62 S.Ct. 356, 86 L.Ed. —-) and on January 5, 1942 rehearing was denied. 314 U.S. 716, 62 S.Ct. 476, 86 L.Ed. —-.

Pursuant to additional stipulations between the government and General Motors the time to answer the government's complaint in the civil suit in the Illinois District Court was successively extended to January 27, 1941, to May 1, 1941, to June 15, 1941, and to June 21, 1941. On the latter date, the government filed an amended complaint. By agreement the time in which to answer this amended complaint was extended to July 15, 1941. General Motors then sought a further extension of time to answer the amended complaint, urging that the civil suit should be postponed pending a final determination of the criminal case and that it was about to petition for a writ of certiorari in the criminal case. The government refused to agree to an extension, stating that any further delay might prejudice the government in connection with its consent decree against Chrysler. The District Court nevertheless entered an order for an indefinite extension of the time in which General Motors might answer the amended complaint. On December 1, 1941 the government moved the District Court to set a day certain by which General Motors would be required to answer and otherwise plead. In the motion and in an accompanying affidavit the government explained the connection be- tween the consent decree against Chrysler and the civil suit against General Motors. After a hearing on the motion the District Court set January 15, 1942 as the date by which General Motors would be required to answer.

The date fixed by the last mentioned order of the District Court in Illinois in the suit against General Motors created further difficulty with respect to the consent decree in the Chrysler case in the District Court of Indiana. It had now become impossible for the government to obtain 'an effective final order or decree' against General Motors, within the meaning of paragraph 12 of the Chrysler consent decree, prior to January 1, 1942. On December 22, 1941, therefore, the government moved the District Court in Indiana for a second modification of paragraph 12 of the Chrysler consent decree by substituting 'January 1, 1943' for 'January 1, 1942'. In its answer Chrysler opposed the modification. The government offered in evidence a transcript of the proceedings in the civil suit against General Motors. Hearing on the motion was continued to February 16, 1942. On that date no additional evidence was introduced, but argument of counsel was heard.

The District Court thereupon made the following findings of fact: (a) that the District Court had specifically retained jurisdiction to modify the consent decree; (b) that paragraph 12 was 'framed upon the basis that the ultimate rights of the parties thereunder should be determined by the government's civil antitrust proceedings against General Motors Corporation and affiliated companies'; (c) that 'time was not of the essence with respect to lapse of the bar against affiliation (between Chrysler and Commercial Credit Company or any other finance company)'; (d) 'That to safeguard defendants against undue delay in such proceedings the decree provided for suspension of certain of its prohibitions in the event con- victions were not obtained in the criminal case against General Motors Corporation by January 1, 1940'; (e) 'that the decree provided for a termination of the bar against affiliation, if the civil proceedings against General Motors Corporation were not...