Foster & Kleiser Co. v. Special Site Sign Co.

• Citation: 85 F.2d 742
• Decision Date: 22 September 1936
• Docket Number: No. 8069.,8069.
• Parties: FOSTER & KLEISER CO. v. SPECIAL SITE SIGN CO.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

85 F.2d 742 (1936)

FOSTER & KLEISER CO. v. SPECIAL SITE SIGN CO.^*

No. 8069.

Circuit Court of Appeals, Ninth Circuit.

September 22, 1936.

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Morrison, Hohfeld, Foerster, Shuman & Clark and Herbert W. Clark, all of San Francisco, Cal., and Gibson, Dunn & Crutcher and Norman S. Sterry, both of Los Angeles, Cal. (J. Hart Clinton and Boice Gross, both of San Francisco, Cal., of counsel), for appellant.

H. W. Glensor, of San Francisco, Cal., Charles W. Cradick and George K. French, both of Los Angeles, Cal., and Roy E. Jackson, of Seattle, Wash., for appellee.

Before WILBUR, MATHEWS, and HANEY, Circuit Judges.

WILBUR, Circuit Judge.

This action was brought by the appellee-plaintiff to recover damages under the Sherman Anti-Trust Act of July 2, 1890 (chapter 647, §§ 1, 7, 26 Stat. 209, 210, 15 U.S.C.A. §§ 1, 15 note), because of an alleged conspiracy on the part of the appellant-defendant corporation to secure and maintain a monopoly of the outdoor advertising business in the Pacific Coast states.

The business of both parties is that of placing advertising matter upon billboards located in various places in the Pacific Coast states. They sell advertising space upon these billboards owned and maintained by them and paste lithographs, or advertising matter, thereon, or paint the advertisement thereon, as the case may be.

The business is essentially local in character. The posted bills remain as posted according to the terms of the contract under which the advertising display is made. In order to bring the conduct of the parties within the jurisdiction of Congress and within the terms of the Sherman Anti-Trust Act (15 U.S.C.A. §§ 1-7, 15 note), which forbids conspiracies having for their purpose the restraint of interstate commerce or the securing of monopolies therein which affect the conduct of such interstate business, it is alleged in the complaint that in the bill posting business of the appellant large quantities of material used in the construction of the billboards, as well as the posters used thereon, are moved from state to state. Thus, it is contended that if Foster and Kleiser ship nails, boards, posters, or other material from one state to another for the purpose of erecting billboards, this constitutes interstate commerce. But as the appellant merely ships this material from one of its agents to another, it could scarcely be contended that it had conspired to restrict its own activities in such interstate commerce, and the effect of such shipments may clearly be disregarded in considering the right of the appellee for damages for the alleged misconduct of the appellant.

It is also alleged in the complaint that the posters and lithographs used upon the billboards are an essential part of the outdoor advertising business, and that these posters and lithographs are manufactured in other states, particularly in Kentucky and Ohio, and transported from the place of manufacture to the billboards upon which they are to be displayed, and the appellee particularly relies upon the alleged restriction of this transportation of posters in interstate commerce as a violation of the Sherman Anti-Trust Act by which it has been damaged. It seeks to recover damages because its interstate commerce in posters and stencils was unlawfully restricted. In support of this proposition the appellee alleges that the posting of bills or posters usually involves an advertiser, a lithographer, and a billposter; that the advertiser secures the poster from the lithographer and makes his contract with the billposter for the displaying of these posters upon its billboards; that the posters are shipped to the billposter, either by the advertiser, or at his direction, by the lithographer; that lithographers print large numbers of posters as sample posters, or stock posters, for sale to the smaller advertising concerns whose business does not justify the preparation of special lithographs; that their posters are purchased by billposters and advertisers throughout the United States and that these lithographs so purchased are moved in interstate commerce; that when an advertiser contracts for billposting in a particular city or town, such work is known to the trade as local work, while if he contracts with billposters in various localities in the same or different states such work is known as national work.

It will be observed that these allegations are entirely consistent with the idea that the appellant billposting concern, aside from its shipments to its various branches had nothing to do with the shipment of posters or their movement in interstate commerce, but received such posters either from the advertiser or the lithographer and displayed the same in accordance with contracts made with the advertiser so to do. An examination of the allegations concerning the methods alleged to have been adopted by the appellant to obtain the monopoly charged indicate that these methods almost entirely relate to the securing of advertising sites, that is, locations for billboards, and with the alleged interference by the appellant with the appellee in its effort to secure and retain such advertising sites. So far as the competition between the parties to this action relates to the securing or retaining of leases for the erection and maintenance of billboards, it is clear that the operations referred to are local and beyond the power of regulation by Congress. Carter v. Carter Coal Co., 56 S.Ct. 855, 80 L. Ed. 1160, decided May 18, 1936; Schechter Poultry Corp. v. U. S., 295 U.S. 495, 55 S. Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947. Such local operations, not constituting interstate commerce, are expressly excluded by Congress from the operation of the Sherman Anti-Trust Act, which by its terms relates only to conspiracies and monopolies in restraint of interstate commerce.

The appellant contends that the complaint does not state a cause of action because of the failure to make any substantial showing that the appellant has interfered with interstate commerce or to disclose any damages resulting to the appellee by reason of its interference with interstate commerce. In making this claim appellant asks us to ignore specific allegations by appellee that its interstate commerce and trade was interfered with by appellant, upon the ground that such allegations are mere conclusions of law, and claims that if such allegations of the complaint are ignored, as they should be, without them the allegations of fact in the complaint are insufficient to allege any cause of action under the Sherman Anti-Trust Act. The general allegation of interference with interstate commerce is a conclusion of law and is controlled by the specific allegation of facts, as to the nature of the appellant's business. We will further consider this question later in the opinion.

Although, as appellant contends, this question arises upon the allegations of the complaint, it arises more sharply with reference to the instructions given and refused by the trial judge upon the subject of what constitutes interstate commerce.

We will first consider the assignments of error relating to that subject, for if a new trial is ordered because of errors in instructing the jury in the progress of the case, then on the new trial, leave should be granted to amend the complaint to state a cause of action if it can be done, based upon interference with interstate commerce, for as has been specifically held by the Supreme Court, interstate trade in posters to be used upon billboards comes within the protective provisions of the Sherman Anti-Trust Act and justifies an action for damages by any one injured by reason of such a violation of that act. Ramsay Co. v. Associated Bill Posters, 260 U.S. 501, 43 S. Ct. 167, 67 L.Ed. 368.

The appellant contended throughout the trial that the billposting business was essentially local and that interference with the leases of the appellee and with the procurement of leases, and with the display upon billboards upon such leased premises, was purely an interference with intrastate business, and therefore not subject to control by Congress and that such damage as resulted from the acts of appellant in connection with the leases procured or sought to be procured by the appellee was not the result of an interference with interstate trade. This contention was clearly correct. It requested the court to give instructions upon that subject, Nos. 6, 9-a, 10, and 13, set out in the footnote.¹ The appellant reserved exceptions to the refusal of these instructions and also excepted to those given by the trial judge, among others, Nos. 9 and 11, shown in footnote.²

By the eleventh instruction the jury was informed that if the business of Foster and Kleiser "required as an indispensable element the transportation of goods or materials, or the transmission of orders across state lines, then you will be justified in finding that the business in which the defendant Foster & Kleiser Company is engaged was interstate in character. The term `commerce' comprehends more than the mere interchange of goods. It embraces intercourse in all its branches." It will be observed that in view of the fact that the business of Foster and Kleiser was conducted in several states, and that some materials for billboards were shipped from state to state, and that orders from the headquarters of the appellant were transmitted to its agencies in other states, it follows that by this instruction the jury were in effect instructed that the Foster & Kleiser Company was engaged in interstate commerce.

During the exceptions to the instructions reserved by the appellant, the court interjected another instruction to the jury regarding the question of interstate commerce, as follows: "The Court. You will pause right there. I think this, perhaps, may pertinently be said to the jury: That regardless of the type of business Foster & Kleiser was engaged in, the business that must have...