United States v. Mountain States Lumber Dealers Ass'n

• Decision Date: 11 July 1941
• Docket Number: No. 9338.,9338.
• Citation: 40 F. Supp. 460
• Parties: UNITED STATES v. MOUNTAIN STATES LUMBER DEALERS ASS'N et al.
• Court: U.S. District Court — District of Colorado

40 F. Supp. 460

UNITED STATES v. MOUNTAIN STATES LUMBER DEALERS ASS'N et al.

No. 9338.

District Court, D. Colorado.

July 11, 1941.

James McI. Henderson, Sheridan Morgan, John W. Porter, and Joseph Williams, all of Denver, Colo., for the Government.

Quigg Newton, Jr., Richard M. Davis, Terrell C. Drinkwater, Newton, Davis & Drinkwater, Clyde C. Dawson, Jr., and Pershing, Bosworth, Dick & Dawson, all of Denver, Colo., Raymond M. Sandhouse, of Sterling, Colo., John E. Gorsuch, of Denver, Colo., Paul L. Martin, of Sidney, Neb., Benedict & Phelps and Horace F. Phelps, all

of Denver, Colo., and William L. Lloyd, of Pueblo, Colo., for certain defendants.

SYMES, District Judge.

In this particular indictment the defendants are charged with a conspiracy to restrain commerce among the several states, in violation of § 1 of the Sherman Act, 15 U.S.C.A. § 1. Paragraph 20, the charging part, says defendants "have been and are engaged in a wrongful and unlawful combination and conspiracy to raise, fix, maintain, and stabilize retail prices for lumber and lumber products transported and shipped into the States of Colorado, Wyoming, and New Mexico from manufacturers located in other States of the United States, which combination and conspiracy has been and is now in restraint of the hereinbefore described trade and commerce". In violation of § 1 of the Sherman Act.

The defendants' position is: The indictment does not sufficiently charge defendants with the offense of conspiring to restrain commerce among the several states, or state definitely the charge, or what is conspiracy to restrain intrastate commerce, as distinguished from interstate commerce. That the defendant lumber dealers are, according to paragraph 4 of the indictment "engaged in the business of purchasing, procuring, and receiving lumber and lumber products from the said manufacturers and wholesalers for the purpose of supplying the demand therefor by contractors, industrial concerns, and other consumers and purchasers."

Further that the defendants' activities alleged in the indictment are those of the usual local retailers purchasing commodities from local wholesalers for local trade, and that the Government's theory of jurisdiction is, as stated in paragraph 19, that there is a continuous chain of shipments of lumber or lumber products from outside the states of Colorado, Wyoming and New Mexico, through retail lumber dealers, to the consuming public within said states, and that the retail lumber dealers are the conduit through which lumber and lumber products from outside the states of Colorado, Wyoming and New Mexico are distributed to the consuming public, in and through said states. Counsel submit this theory of jurisdiction is unsupported by law. Let us see.

We adopt as part of this opinion the opinion this day filed in case No. 9337. United States v. National Retail Lumber Dealers Ass'n, 40 F.Supp. 448. The authorities there cited answer most of counsels' contentions. Assuming, as we must, that the defendants are capable of doing what they are charged with, does the indictment state a violation of the Act?

In Montague & Co. v. Lowry, 193 U.S. 38, page 44, 24 S.Ct. 307, 48 L.Ed. 608, the combination denounced was an agreement to prevent the dealer in tiles in San Francisco, not a member of the association, from purchasing or procuring the same upon any terms from any of the manufacturers who were such members, and all of those manufacturers who had been accustomed to sell to the plaintiffs were members. A nonmember dealer was also prevented from buying tiles of a dealer in San Francisco who was a member except at a greatly enhanced price over what he would have paid to the manufacturers, or to any San Francisco dealer who was a member if he, the purchaser, was also a member of the association.

The Court held this agreement restrained trade, for it narrowed the market to sales of tiles in California from manufacturers and dealers therein in other states, so that they could only be sold to the members of the association, and that it enhanced prices to the nonmember, as already stated. The Court points out that the sale of tiles between the manufacturers in one state and dealers in California was interstate commerce, and said, 193 U.S. page 45, 24 S.Ct. page 309, 48 L.Ed. 608: "It is urged that the sale of unset tile, provided for in the seventh section of the by-laws, is a transaction wholly within the state of California and is not in any event a violation of the act of Congress which applies only to commerce between the states. The provision as to this sale is but a part of the agreement, and it is so united with the rest as to be incapable of separation without at the same time altering the general purpose of the agreement. The whole agreement is to be construed as one piece, in which the manufacturers are parties as well as the San Francisco dealers, and the refusal to sell on the part of the manufacturers is connected with and a part of the scheme which includes the enhancement of the price of the unset tile by the San Francisco dealers. The whole thing is so bound together that when looked at as a whole the sale of unset tile ceases to be a mere transaction in the state of California, and becomes part of a purpose which, when carried out, amounts to and is a contract or combination in restraint of interstate trade or commerce."

See, also, Swift & Co. v. United States, 196 U.S. 375, where the language at the bottom of page 398, 25 S.Ct. 276, at page 280, 49 L.Ed. 518, if we substitute "lumber" for "cattle", would read as follows: "* * * commerce among the states is not a technical legal conception, but a practical one, drawn from the course of business. When lumber is sent for sale from a place in one state, with the expectation that it will end its transit, after purchase, in another, and when in effect it does so, with only the interruption necessary to find a purchaser at the retailer's yard, and when this is a typical, constantly recurring course, the current thus existing is a current of commerce among the states, and the purchase of the lumber is a part and incident of such commerce".

The Court further held that it does not matter that a combination of the nature charged embraces restraint and monopoly of trade within a single state, if it also embraces, and directed against, commerce among the states, and even if the separate elements of such a scheme are lawful, when they are bound together by common intent as part of an unlawful scheme to monopolize interstate commerce, the plan may make the parts unlawful.

And in Stafford v. Wallace, 258 U. S. 495, page 519, 42 S.Ct. 397, at page 403, 66 L.Ed. 735, 23 A.L.R. 229, the Swift case was affirmed, and the Court stated: "This court declined to defeat this purpose in respect to such a stream and take it out of complete national regulation by a nice and technical inquiry into the non-interstate character of some of its necessary incidents and facilities, when considered alone and without reference to their association with the movement of which they were an essential...