Belfi v. United States

• Citation: 259 F. 822
• Decision Date: 18 June 1919
• Docket Number: 2411.
• Parties: BELFI et al. v. UNITED STATES.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

259 F. 822

BELFI et al. v. UNITED STATES.

No. 2411.

United States Court of Appeals, Third Circuit.

June 18, 1919

Edward J. Mingey, Frank M. Cody, and Harry M. McCaughey, all of Philadelphia, Pa., for plaintiffs in error.

G Carroll Todd and Ernest Harvey, Asst. U.S. Attys., and Henry S. Mitchell, Sp. Asst. Atty. Gen., for the United States.

Before BUFFINGTON, WOOLLEY, and HAIGHT, Circuit Judges.

WOOLLEY Circuit Judge.

The defendants were convicted in the court below under an indictment preferred against them at the instance of the United States for engaging in a conspiracy to restrain interstate trade and commerce, in violation of the act of Congress, entitled, 'An Act to protect trade and commerce against unlawful restraints and monopolies,' approved July 2, 1890 (26 Stat. 209, c. 647 (Comp. St. Sec. 8820)). After sentence, the defendants sued out this writ of error and now raise several questions for review, the principal one being, whether the evidence sustains the conviction, and whether, accordingly, the trial court erred in denying a motion to direct a verdict of acquittal. The determination of this question involves another, which concerns the conduct of the defendants in combining as members of a trade association to refrain from business dealings with others who deal with non-member competitors, raising the issue, whether the restraint of interstate trade and commerce resulting therefrom, if any, was so indirect and remote as not to be within the offence of the statute.

The industry out of which this controversy arose is the tile industry. In it are engaged three classes of persons, tile manufacturers, tile dealers, and tile setters. The part taken by each class is fairly indicated by its name. The business of tile dealers, as conducted in Philadelphia, is of a character that does not require them to keep tiles in stock. It consists chiefly in making bids on proposals, and, when their bids have been accepted and contracts have been entered into, tiles of the kinds specified are then procured from tile manufacturers and are put in place by tile setters employed by the tile dealers.

The defendants, who are tile dealers engaged in the retail tile business in Philadelphia and vicinity, had joined together and associated themselves in a trade organization known as the Philadelphia Tile, Mantel & Grate Association, ostensibly for the correction of trade abuses and evil practices and the promotion of sound business policies. This association though admittedly a trade combination, was not regarded by the trial court to be in and of itself a combination violative of the federal statute against unlawful restraints and monopolies. The controversy, therefore, concerns not the unlawfulness of the combination but the unlawfulness of the conduct of some of its members in carrying out its conceivably lawful purposes. This conduct consisted, as it is alleged by the indictment, in excluding trade competitors from membership in the association, in the refusal of association dealers to buy tiles from manufacturers that sold tiles to nonmember dealers, and in entering into agreements with a tile setters' labor union, whereby association dealers obtained from the union, first, a preference over non-member dealers in the employment of union tile setters and, second, a promise by the union to supply no tile setters to tile dealers outside of the association, thereby creating a boycott of non-member tile dealers by making it impossible for them to get materials for their business and labor with which to carry it on.

Turning to the evidence, we find that a written contract was formally entered into between the association and the union covering hours of labor, wage scale, and other matters not pertinent to this issue. It included also provisions whereby members of the association agreed that they would employ none but members of the labor union, and the union in return agreed that it would give preference to requests made by association dealers for tile setters over similar requests made by non-member dealers. That these provisions were contained in the agreement and were carried out by the parties is conceded. The defendants maintain, however, that this agreement and its literal performance constitute the whole of their conduct, and as this conduct affected interstate commerce only remotely, if at all, the trial court should have acquitted them of the charge of offending against the statute.

If this were all the testimony, we would have little difficulty in concurring in this view, for, manifestly, restraint of interstate commerce resulting from such an agreement would not be of that direct character which the courts have interpreted to be within the meaning of the statute. But there is other testimony, which, if believed, gives the case a different aspect.

It is admitted by the defendants that the association endeavored to write into the contract between itself and the union a reciprocal provision whereby the union would agree not to allow its members to work for dealers outside the association in consideration of the undertaking of the association not to employ setters outside the union. To this provision, it is conceded, the union did not agree -- in writing. But it is in evidence (though denied by the defendants) that the association and the union entered into an oral contract to this effect at the same time they entered into the written contract. In operating under the two contracts, there is evidence quite sufficient for a jury to find that the association, representing about 90 per cent. of the tile dealers, and the union, comprising nearly all the tile setters in Philadelphia and vicinity-- the latter being described as 'close to 100 per cent. organization'-- so cooperated that non-member dealers could not employ tile setters. Being blocked in obtaining labor, there is evidence that non-member dealers were as effectually blocked in obtaining materials for their business because of the endeavor by some association members to induce union setters, through the union, to refuse to set tiles sold by manufacturers to non-member dealers, and because of the refusal of tile manufacturers to sell tiles to non-member dealers under the threat of association dealers that they would not buy tile from them if they sold to dealers outside the association. As all tile manufacturies in the country, save one, are located in states other than the state of Pennsylvania, an interference with commerce caused by the refusal of tile setters to set tile and of tile manufacturers to sell tile is necessarily interstate in character. The jury having found that the defendants had by their acts restrained commerce, and that restraint being of commerce that was interstate in character, the only question for us to decide is, whether the restraint to interstate commerce thus occasioned by the defendants, was so indirect and remote that the trial judge should have declared as a matter of law that it was not such restraint as is contemplated by the statute.

The determination of this question turns on familiar principles repeatedly declared by the courts and stated nowhere more clearly perhaps than by the Supreme Court in Hopkins v. United States, 171 U.S. 578, 19 Sup.Ct. 40, 43 L.Ed. 290, and Anderson v. United States, 171 U.S. 604, 19 Sup.Ct. 50, 43 L.Ed. 300. These cases are cited by the defendants as presenting facts analogous to the facts of this case, and are confidently relied upon as ruling this case on the law.

Hopkins v. United States and Anderson v. United States were companion cases arising out of the manner in which business was conducted in the stock yards at Kansas City. The business of the stock yards was transacted by members of two exchanges and also by persons who were members of neither exchange. The Kansas City Live Stock Exchange (under consideration in the Hopkins Case) was an association of commission merchants. The rules of this association forbade members buying live stock from commission merchants of Kansas City not members of the exchange, and forbade members transacting business with any person violating its rules and regulations. The Traders' Live Stock Exchange (under consideration in the Anderson Case) was, as its name denotes, an association of yard traders, men who speculated in live stock. The articles of association of the Traders' Live Stock Exchange forbade its members recognizing any yard trader unless he was a member of the exchange, and forbade any member of the exchange purchasing cattle from a commission merchant who sold or purchased cattle from any yard trader who was not a member of the exchange. The main difference between the two exchanges was that the members of the Traders' Live Stock Exchange being traders, were themselves purchasers of cattle on the market, while the members of the Kansas City Live Stock Exchange were commission merchants who received cattle by consignment and sold them on commission. The purposes of the two exchanges being kindred, the Government charged that the association of commission merchants in one case and of yard traders in the other were combinations in restraint of interstate trade violative of the statute.

In each of these cases, the Supreme Court very carefully pointed out that there was no evidence of any act on the part of the defendants preventing access to the yards or preventing purchases and sales of cattle by anyone, other than as such sales were prevented by the mere refusal on the part of the defendants to do business with non-members in a manner violative of the rules of their respective exchanges, and that there was no evidence that the defendants had in any manner 'other than by the rules mentioned hindered or impeded others in shipping, trading or selling...