United States v. National Ass'n of Real Estate Bds., Civ. A. No. 3472-47.

• Decision Date: 28 June 1949
• Docket Number: Civ. A. No. 3472-47.
• Citation: 84 F. Supp. 802
• Parties: UNITED STATES v. NATIONAL ASS'N OF REAL ESTATE BOARDS et al.
• Court: U.S. District Court — District of Columbia

84 F. Supp. 802

UNITED STATES v. NATIONAL ASS'N OF REAL ESTATE BOARDS et al.

Civ. A. No. 3472-47.

United States District Court District of Columbia.

June 28, 1949.

Victor H. Kramer, Herbert N. Maletz, and C. Heyward Belser, all of Washington, D. C., for plaintiff.

Roger J. Whiteford and Jo V. Morgan, Jr., both of Washington, D. C., for defendants National Association of Real Estate Boards and Herbert U. Nelson.

William E. Leahy and William J. Hughes, Jr., both of Washington, D. C., for defendants Washington Real Estate Board and others.

A. K. Shipe, of Washington, D. C., for defendant J. Hawley Smith.

HOLTZOFF, District Judge.

This is a civil action by the United States for an injunction to restrain the defendants from continuing alleged violations of the Sherman Anti-Trust Act, 15 U.S.C.A. §§ 1-7, 15 note. The suit is brought under Section 3 of the Act, U.S.C.A., Title 15, § 3. The pertinent portions of this section are as follows:

"Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade or commerce in * * * the District of Columbia * * * is declared illegal."

The defendants in this case are, first, the Washington Real Estate Board, which is a corporation having its place of business in the District of Columbia. Other defendants are members of the Board, who are sued as a class, a few of the members being named as representatives of the class. Finally, there is also joined as a defendant the National Association of Real Estate Boards, which is a corporation having its principal place of business in Chicago, Illinois. The National Association comprises among its members various local real estate boards, and the Washington Real Estate Board is one of these members.

The Government contends that the defendants have combined to fix real estate brokerage commissions to be charged by real estate brokers in the District of Columbia. The Government urges that this activity constitutes a violation of the Sherman Anti-Trust Act.

In brief, the evidence shows that the membership of the Washington Board embraces about 250 real estate brokers out of a total number of about 2,000 brokers operating in the District of Columbia. The Washington Board has for many years prescribed fixed rates of commissions to be paid to brokers on sales of real property. The rates are published and are readily available to the public. All members of the Board are urged to use these rates. Actually, both members and many nonmembers employ them. There is nothing clandestine or surreptitious about this activity of the Washington Board. The National Association has been joined as a defendant on the theory that it has encouraged and has incited the Washington Board to fix and prescribe rates of commissions to be charged by the members of the latter.

In 1943 the rates were changed, resulting in higher charges in many instances and in lower commissions in other situations. In actual practice, the prescribed rates of commissions are used in the great majority of transactions, although at times, in exceptional situations, a lower charge is made than that prescribed by the Board. For example, smaller commissions than the standard rate have been charged in connection with large developments comprising a great many homes.

No evidence has been introduced tending to show that the standard rate of commissions prescribed by the Washington Board is unreasonable or excessive or that this activity unduly or unreasonably restrains competition as between brokers or adversely affects the sales of real property. On the contrary, there is evidence in the record to the effect that before the Board attempted to fix standard commission rates there was chaos and confusion, resulting in occasional overcharges on the part of the less scrupulous members of the craft, and that one of the purposes of the Board was to eliminate this undesirable condition. The Government contends, however, that irrespective of whether it is reasonable or laudable, the fixing of commission rates is illegal per se and constitutes a violation of the Sherman Act.

Ever since the decisions of the Supreme Court in Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619, 34 L.R.A.,N.S., 834, Ann.Cas.1912D, 734, and United States v. American Tobacco Co., 221 U.S. 106, 31 S.Ct. 632, 55 L.Ed. 663, it has been consistently held that the Sherman Act does not ban all restraints of trade, but proscribes only those that are unreasonable. In...