330 U.S. 743 (1947), 27, Bruce's Juices, Inc. v. American Can Co.

Docket Nº:No. 27
Citation:330 U.S. 743, 67 S.Ct. 1015, 91 L.Ed. 1219
Party Name:Bruce's Juices, Inc. v. American Can Co.
Case Date:April 07, 1947
Court:United States Supreme Court

Page 743

330 U.S. 743 (1947)

67 S.Ct. 1015, 91 L.Ed. 1219

Bruce's Juices, Inc.


American Can Co.

No. 27

United States Supreme Court

April 7, 1947

Reargued November 14, 1946



In a suit by a seller against a buyer on notes given for the accumulated balance remaining on a running account of sales and credits over a period of years, it is no defense that the seller had engaged in price discriminations against the buyer in violation of the Robinson-Patman Act, which prescribes criminal penalties and entitles injured persons to triple damages, but does not expressly make the contract of sale illegal or the purchase price uncollectible. Pp. 750-757.

155 Fla. 877, 22 So.2d 461, affirmed.

The Supreme Court of Florida affirmed a judgment on certain notes for the unpaid balance of the purchase price of goods. 155 Fla. 877, 22 So.2d 461. This Court granted certiorari, 326 U.S. 711, and affirmed the judgment below by an equally divided Court. 327 U.S. 758. It granted a rehearing and restored the cause to the docket for reargument before a full bench. 327 U.S. 812.

Affirmed, p. 757.

Page 744

JACKSON, J., lead opinion

MR. JUSTICE JACKSON delivered the opinion of the Court.

The federal question which survives proceedings in the Florida state courts is whether renewal notes representing the purchase price of goods sold and delivered are uncollectible if it is found that the vendor violated the Robinson-Patman Act, 49 Stat. 1526, 1528, 15 U.S.C. §§ 13, 13a.

[67 S.Ct. 1016] Bruce is a canner and, over a period of years, bought its cans chiefly from The American Can Company. A debt accumulated which was put into promissory notes, and on one or more occasions, they were renewed, reduced by amounts which had been paid. Upon eventual default, two suits, later consolidated, were brought on renewal notes aggregating about $114,000. As to each note, Bruce pleaded in defense that "the consideration for said notes is illegal and said notes void and of no force and effect." This was said to be for the reason that the Can Company had sold to others at prices which discriminated against Bruce, and thereby violated the Robinson-Patman Act.

The alleged discrimination chiefly relied upon consisted of quantity discounts. Annual purchases by Bruce

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were about $350,000. Some other canners bought much larger quantities. The Can Company's contract with all its customers allowed a discount of 1% on annual purchases of $500,000, and nothing to those whose purchases were less than that. It was so graduated as to give a maximum discount of 5% to a customer whose purchases were $7,000,000 a year. The consequence is that relatively small packers pay 5% more for their cans than their largest competitors.

It is claimed that this advantage to quantity buyers renders the quantity discount per se a violation of the Robinson-Patman Act. To sustain the defense in this case, it would be necessary to so hold. It is not denied that Bruce got the same discounts as other purchasers of like quantities when it qualified, and, in one year, Bruce was in the $500,000 bracket and received the 1% Discount. It is not claimed that the Can Company failed to give discounts where earned under this uniform contract, or that discounts were given where not so earned. Bruce received the same discounts as others within its classification, and it is not questioned that, had it been a purchaser of larger quantities, it would have been allowed the same discount as other purchasers of that class.

Before a court could sustain the defense in this particular case, it would also have to overcome other difficulties of law and fact. The Act does not prohibit all quantity discounts, but expressly permits them under certain conditions. It indicates, too, that the Federal Trade Commission is the appropriate tribunal to hear in the first instance the complicated issues growing out of grievances against a quantity discount practice of a seller. 49 Stat. 1526, 15 U.S.C. § 13(a). Quantity discounts are among the oldest, most widely employed and best known of discount practices. They are common in retail trade, wholesale trade, and manufacturer-jobber relations. They are common in regulated, as well as unregulated,

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price structures. Congress refused to declare flatly that they are illegal. They become illegal only under certain conditions, and when they are illegal, it is as much a violation to accept or receive as to allow them. Bruce, in one of the years included in its balance of account, purchased more than a half million dollars of cans on which it received precisely the kind and amount of discount it now asserts to be illegal.

The argument is made that such a remedy as Bruce seeks here would support the anti-monopoly policy of Congress. But Bruce is not complaining of the high price of cans. Bruce complains of a lower price for cans to others -- which would enable competitors to put their products on the market cheaper. This may well put Bruce to some disadvantage, but it does not follow that Congress would forbid the savings of large-scale mass production to be passed along to consumers. The economic effects on competition of such discounts are for the Trade Commission to judge. Until the Commission has determined the question, courts are not given guidance as to what the public interest does require concerning the harm or benefit of these quantity discounts on the ultimate public interests sought to be protected in the Act. It would be a far-reaching decision to outlaw all quantity discounts. Courts should not rush in where Congress feared to tread.

[67 S.Ct. 1017] Because of a more fundamental defect in petitioner's case, however, the Court does not find it necessary to consider the effect of these features of the Act on this case, as would be necessary before a conclusion could be reached that petitioner should win on the merits. On the questions of fact, considerable evidence was taken at pretrial hearings, and the parties are in dispute as to whether the decision thereon was a final judgment, and, if so, as to whether the defense was not also adjudicated to be insufficient on the facts. Although the record is unsatisfactory,

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we take it that all of the sales evidenced by the notes were made after the passing of the Robinson-Patman Act. It appears, however, that the notes are not identified with any particular sale, but represent a balance remaining on a running account of sales and credits in many of which a claim of discrimination might not be supportable. The indebtedness they supplant is conceded to have been incurred before February, 1940. The purchases covered at least a four-year period and involved two types of cans. The purchase price which Bruce asks us to excuse it from paying is not identified either as to type of can or date of transaction. But petitioner contends that it is not necessary in proving a discrimination to show that others received a different discount on the same type of can at approximately the same time "because the scheme of discount by aggregate dollar volume of annual sales comprehends all cans bought whatever their size or price." To sustain this position would mean that a sale to a competitor of large cans in 1940 at a higher discount invalidated a sale of small cans to petitioner in 1936, so that petitioner need not pay the contract price for cans delivered that year. The contention is simply that, if some purchasers got larger discounts on any bill for cans than petitioner got, the bill against petitioner and notes in settlement and extension of it are uncollectible.

However, for the purposes of this decision, in view of the uncertain nature of the proceedings below, we assume, but do not decide, that the defense on the facts has been or could be established as pleaded. We do not decide whether the quantity discount plan, whatever the facts were, violated the Robinson-Patman Act. The sole question we decide is whether notes given for purchases are unenforceable if the quantity discount plan violates the Act. Petitioner suggests that the Court may take two paths to the answer, but that the answer will be yes. The

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broad ground petitioner offers is "that a transaction unlawful under the Robinson-Patman Act constitutes criminal conduct upon which no money judgment can be based." Petitioner also offers a narrow ground on which we can yet decide in its favor. "But, if it be admitted that the buyer [sic] is entitled to the fair value of the goods," petitioner says, respondent probably already has been paid the fair value of all the cans bought in 1936-40. When that value has been determined by the trial court, it urges, it will be found that the amount in notes is substantially equivalent to the amount of discrimination in discount.1

In effect, petitioner is treating the $114,000 in notes as representing the discount it claims it should have gotten on its 1937-42 purchases of $2,000,000. This alternative argument is that petitioner is liable only for the fair value of all the cans it bought, and, in this suit, it asks the courts to determine what that fair value was. But the fact is that, as to the transactions for which petitioner paid $2,000,000, it has already paid the agreed price. Those transactions cannot be identified with particularity, but they were paid for at respondent's prices. Petitioner did not allege and does [67 S.Ct. 1018] not contend that the notes represent specific transactions, or that the sales for which they were given could be identified. Mr. Bruce conceded in his testimony that the notes simply represent a balance of an account which mingled the prices of individual transactions.2

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In its brief here, petitioner's only response to respondent's...

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