Berenson v. H.G. Vogel Co.

• Decision Date: 29 June 1925
• Citation: 253 Mass. 185,148 N.E. 450
• Parties: BERENSON v. H. G. VOGEL CO., Inc. H. G. VOGEL CO., Inc., v. BERENSON.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

253 Mass. 185

148 N.E. 450

BERENSON

v.H. G. VOGEL CO., Inc.

H. G. VOGEL CO., Inc.,

v.BERENSON.

Supreme Judicial Court of Massachusetts, Suffolk.

June 29, 1925.

Appeal from Superior Court, Suffolk County; Morton, Judge.

Suit by Mashie Berenson against the H. G. Vogel Company, Inc., to restrain defendant from removal of automatic fire sprinkler system from plaintiff's building, in which defendant filed cross-bill for amount due it from plaintiff under terms of contract for installing said system. From an interlocutory decree permitting late filing of exceptions to master's report, and from final decree, defendant appeals; from order or decree overruling exceptions to master's report, and from final decree, plaintiff appeals. Affirmed.B. Berenson and W. B. Keenan, both of Boston, for plaintiff.

J. G. Palfrey and M. C. Taylor, both of Boston, for defendants.

BRALEY, J.

The plaintiff, owner of a building in the city of Boston, having been required by law to equip it with an automatic fire sprinkler system, entered, on or about October 16, 1919, into a contract with the company to install the necessary apparatus. The work was completed to the plaintiff's satisfaction May 4, 1920, and partial payments were made, leaving a balance of $4,447.13, which the plaintiff stipulated the company was entitled to recover under its cross-bill if the contract was enforceable. We shall refer to Berenson as the plaintiff, and to the H. G. Vogel Company, Inc., as the defendant. The defendant under the contract retained title, and if the plaintiff defaulted it could remove any part of the equipment. If removal became necessary, the plaintiff also engaged to pay the reasonable value of the services for installation, and for removal, as well as all other expenses incurred, and any loss or injury thereby caused. It is alleged that, because of the plaintiff's failure to make full payment, the defendant has threatened such removal, which will seriously damage the plaintiff. The material prayers are that the contract be declared illegal and void, with injunctive relief, on the ground that when made, and during its performance, the defendant with other dealers in sprinklers was engaged in an illegal combination, trust, or conspiracy forbidden by St. 1908, c. 454, now G. L. c. 93, §§ 2, 3, and by the Sherman Act of July 2, 1890, 26 U. S. Stat. 209, c. 647, §§ 1, 2 (U. S. Comp. St. §§ 8820, 8821).

It is necessary, however, before considering the merits, to dispose of certain interlocutory questions. The demurrer to the cross-bill was waived by the defendant proceeding to a hearing on the merits. Torrey v. Parker, 202 Mass. 520, 108 N. E. 472. We assume in favor of the plaintiff that his exceptions to the master's report were properly allowed to be filed under a special order of the court. Nye v. Whittemore, 193 Mass. 208, 209, 79 N. E. 253.

While the exceptions as a whole are not specifically argued, and need not be separately reviewed, it is generally contended by the plaintiff, apparently under his third exception, that, being unsupported by his preceding findings as to combination and conspiracy, the master's final conclusions upholding the validity of the contract were unwarranted, and that the decree dismissing the bill should be reversed. Phelps v. Creed, 231 Mass. 228, 120 N. E. 589;Simoneau v. Landry, 242 Mass. 578, 136 N. E. 601.

Restrictions affecting competition can be striven for without violation of law. United States v. United Shoe Machinery Co., 247 U. S. 32, 38 S. Ct. 473, 62 L. Ed. 968. And a consolidation or combination of corporations engaged in a common business enterprise does not show an unlawful purpose. Board of Trade v. United States, 246 U. S. 231, 38 S. Ct. 242, 62 L. Ed. 683, Ann. Cas. 1918D, 1207. The pertinent inquiry, whether there is an unlawful purpose creating or tending to create a monopoly, depends on the circumstances of each case. The facts peculiar to the business, the conditions before and after the alleged restraint was imposed, its nature, and the purpose sought to be attained, as well as prevalent economic necessities, are to be considered as relevant. It is primarily a question of fact. Board of Trade v. United States, 246 U. S. 231, 38 S. Ct. 242, 62 L. Ed. 683, Ann. Cas. 1918D, 1207;United States v. United Steel Corporation, 251 U. S. 417, 40 S. Ct. 293, 64 L. Ed. 343, 8 A. L. R. 1121;Commonwealth v. Dyer, 243 Mass. 472, 138 N. E. 296.

The following findings appear in the master's report on evidence not reported. The defendant, from a trade paper, having ascertained that the plaintiff was building a garage, applied to the Boston office of the Fire Protection Survey Bureau for particulars as to the engineering work necessary for the installation of a sprinkler system. It received from the bureau a ‘quantity estimate sheet,’ giving the outline of the building, and its water connections, with a supplemental report, entitled ‘Specifications.’ The defendant, having applied the figures or data to its price list book and to the quantity estimate sheet, deducted 60 per centum as a discount, allowed a small sum for extras, and submitted a bid to the plaintiff's architect of $6,490. The plaintiff also received higher bids from the Rockwood and the Globe Automatic Sprinkler Companies, as well as two bids from other sources. The defendant after some delay notified the plaintiff that its bid was increased to $7,153. But upon conference the price was fixed at $6,750, which was inserted in the contract. The defendant also was obliged to have a construction engineer make measurements of the work and prepare a complete set of plans, which had to be approved by the building department and the fire underwriters of the city. If the approval of the fire board was not obtained, insurance rates because a sprinkler system had not been installed could not be procured. The defendant, following the plan, assembled and shipped the necessary material to the building. If the plans were not complete, the exact number of sprinkler heads could not be ascertained, and because of this condition the clause in the contract relating to charging or crediting sprinkler heads at $5.50 each was inserted. It is plain that the contract on the foregoing statement of its origin and formation bears no taint of illegality.

But at some time during the period of the World War the companies engaged in installing sprinklers had formed an automatic sprinkler committee for war service, to act in combination with the United States Government's War Industries Board. The history and development of this arrangement and its general operation and management is fully shown by the report. But, after it had been in operation for some eight months, one Wellman, a member of the committee, was convinced that on account of the many duplications, inaccuracies, changes, and conflicting ideas, a very great saving could be accomplished generally by having one engineering office make an accurate survey of each prospective sprinkler equipment. He submitted a proposition to several sprinkler companies, which was accepted, that an engineering organization should be established, and that Wellman should be engaged by the companies to make all ‘estimates and surveys.’

The economic reasons for this plan led to the formation June 7, 1918, under the laws of Illinois, of a corporation known as H. H. Wellman, Inc., which name was changed September 7, 1918, to the Fire Protection Survey Bureau. It subsequently became a member of the Mutual Fire Protection Association. The representatives of six companies, including the defendant, which had been members of the committee for war service, were the promoters, officers, directors, and...