Bluefields S. S. Co., Ltd. v. United Fruit Co.

• Decision Date: 26 June 1917
• Docket Number: 2196.
• Citation: 243 F. 1
• Parties: BLUEFIELDS S.S. CO., Limited, v. UNITED FRUIT CO.
• Court: U.S. Court of Appeals — Third Circuit

243 F. 1

BLUEFIELDS S.S. CO., Limited, v. UNITED FRUIT CO.

No. 2196.

United States Court of Appeals, Third Circuit.

June 26, 1917

[Copyrighted Material Omitted] [Copyrighted Material Omitted]

Robert W. Childs and John S. Hummer, both of Chicago, Ill., William L. Hughes, of New Orleans, La., and Thomas F. Gain, Francis Shunk Brown, and Alexander Simpson, Jr., all of Philadelphia Pa., for plaintiff in error.

George Wharton Pepper, of Philadelphia, Pa., and Moorfield Storey and Robert G. Dodge, both of Boston, Mass., for defendant in error.

Before BUFFINGTON, McPHERSON, and WOOLLEY, Circuit Judges.

WOOLLEY Circuit Judge.

This is an action brought under the seventh section of the Sherman Act (Act of July 2, 1890, c. 647, 26 Stat. 209) to recover damages for injuries alleged to have been sustained in consequence of conduct thereby forbidden and declared unlawful.

The plaintiff's case may be briefly stated as follows: Before October 14, 1899, the parties to this action were active competitors in importing bananas into the United States and selling them in interstate commerce. On that date, the defendant, for the purpose of destroying competition and monopolizing the importation of bananas and controlling their distribution and price in the several states, purchased from various stockholders of the plaintiff one-half of its capital stock, and procured the voting power of one additional share.

By force of the control thus obtained, the defendant dominated the affairs of the plaintiff, elected its officers, and through them directed its policy in a manner that unreasonably restrained trade and created in itself a monopoly in the banana business contrary to law.

To attain this end the defendant, acting through officers of its selection, compelled the plaintiff to enter into contracts with the Fruit Dispatch Company, a corporate subsidiary of the defendant, whereby the plaintiff was required to distribute all its fruit in the manner and dispose of it at prices determined by that company, and by various acts greatly reduced the acreage and increased the cost of banana planting upon the plaintiff's plantations, sold its fruit at greatly reduced prices compared with what would have been obtained if the fruit had not been sold through the Dispatch Company, curtailed importations, increased operating expenses, wasted money in unnecessary competition, leased certain of its properties for inadequate rents to irresponsible tenants, neglected and abandoned other properties, and permitted deterioration of its shipping facilities and equipment. From all these things, the plaintiff claimed to have suffered actual damage to the amount of five million dollars, to be trebled by the provision of the Sherman Act. Stated generally, the plaintiff's principal claim of damage was the loss of profits which it would have made if it had been allowed to continue its business in competition with the defendant.

For defense the defendant offered evidence tending to prove that no injury had been inflicted upon the plaintiff by anything it had done or had permitted to be done, but, that, on the contrary, its control had been to the plaintiff's financial advantage; that if it inflicted any injury upon the plaintiff it was done without intent to injure; and that the conduct of its control and its management of the plaintiff's properties and the marketing of its product through the channels employed were pursued according to the terms and within the spirit of contracts sought by all the plaintiff's stockholders and entered into between the defendant and all the plaintiff's stockholders (save one), in which contracts the plaintiff corporation actively participated and all its stockholders (including this one) freely acquiesced through a long period of years, so that, the defendant maintained, if its conduct be found to offend the provisions of the Sherman Act, then the plaintiff was in pari delicto and was without right to recover. The defendant further pleaded the statute of limitations.

The jury rendered a verdict for the defendant; on the judgment entered, the plaintiff sued out this writ of error.

This trial, covering a period of forty-five days, produced a record of unusual length. Eighty-four errors are assigned. While some of the assignments bear upon separate and unrelated matters, it has been possible, with the assistance of counsel, to so group the most of them, that the substantial questions may be considered and determined upon broad principles of law.

Before we approach the trial and follow its trend, we shall dispose of a number of assignments of error arising out of certain action which the court took before trial.

In addition to testimony from witnesses to be produced at the trial, the plaintiff proposed to prove its case by introducing the findings of a master in the case of Steele v. United Fruit Company et al., heard and decided in the Circuit Court of the United States for the Eastern District of Louisiana (190 F. 631) and affirmed by the Circuit Court of Appeals for the Fifth Circuit (194 F. 1023, 114 C.C.A. 666).

That was an action against the United Fruit Company and others, instituted by a stockholder of the plaintiff, and concerned the defendant's stock control over the plaintiff. The findings recited in detail the manner of its acquisition and exercise. The plaintiff conceived that many of the facts upon which the decree in that case was based would sustain a judgment in this case, and therefore their submission and determination in that case constituted res judicata in this case. If that were so, then manifestly the plaintiff would have the great advantage of being relieved of the necessity of proving here what had there been judicially determined, and the defendant would have the corresponding disadvantage of being concluded thereby. So in order to ascertain before trial what the court would decide at trial as to whether and to what extent the findings in the Steele Case were res judicata of the issues in this case, the plaintiff petitioned the court for a preliminary hearing upon those questions. Upon granting the petition and stipulation by counsel as to questions submitted and exceptions reserved, the court, in a commendable effort to facilitate the litigation, attempted the doubtful expedient of declaring before trial what would be its decision at trial upon the offer of the master's findings as res judicata.

Having before it the full record of the Steele Case and only so much of the record of this case as had then been made by the pleadings, the trial court heard argument and stated in advance the rulings which it would make at the trial.

To the first question-- whether or not the findings and conclusions in the case of Steele v. United Fruit Company in the District Court for Louisiana are res judicata as to any of the issues in this case-- the court stated it would rule that:

'Such of the findings and conclusions in the Steele Case as are material and essential as a basis for the decrees therein are res judicata in so far as they are material and relevant to the determination of the issues in this case.'

To the next question-- to what extent are the findings and conclusions in the Steele suit res judicata-- the court announced that they would be held to be 'res judicata only in so far as they are evidence--

'1. To show domination and control of the Bluefields Company by the United Fruit Company up to the time of the commencement of the Steele suit;

'2. To show intent to dominate and control;

'3. To show intent through domination and control to injure the business or property of the Bluefields Company in restraint of interstate or foreign trade or commerce.

'4. To show that, through such domination and control, injury was done resulting in damage to the business or property of the Bluefields Company within the period of the applicable statute of limitations.

'They are not res judicata as to the extent of damages suffered by the Bluefields Company, because the extent of damages was not in issue in the Steele Case.'

The court then passed upon and designated the particular findings and conclusions of the special master (being thirty-four in number) which were within its ruling. When the case came on for trial and the record grew from pleadings of parties to testimony of witnesses, the court, acting within what appears to be a deliberately made saving clause in its advance statement, refused to hold as res judicata some of the findings it had previously designated as such, because found immaterial and irrelevant to the issues in this case as they had developed. The plaintiff therefore claims, under appropriate assignments, that the court erred greatly to its prejudice: (1) By refusing to admit as res judicata certain findings and by striking out others; (2) in admitting evidence offered by the defendant tending to contradict matters concluded by the findings; and (3) in neutralizing or devitalizing certain other findings, duly admitted, by charging the jury in a manner inconsistent with their proper application.

We think no criticism should be directed to the trial judge for his change of attitude at trial, for to determine before trial, merely from examination of pleadings and before the case has broadened into testimony whether matters in a case previously tried are material and relevant to a case yet to be tried, is a judicial task rather difficult of accurate performance. Apparently alive to this, the judge wisely saved himself in his advance ruling by deciding generally that the matters in the Steele Case were res judicata in this case only in so far as they proved material or relevant to the issues in this case. The effect of that ruling was to defer to trial final decision on...