Brown v. Jacobs Pharmacy Co

• Decision Date: 30 April 1902
• Parties: BROWN et al. v. JACOBS PHARMACY CO.
• Court: Georgia Supreme Court

41 S.E. 553

115 Ga. 429

BROWN et al.

v.JACOBS PHARMACY CO.

Supreme Court of Georgia.

April 30, 1902.

MONOPOLIES—RESTRAINT OF TRADE—ANTITRUST ACT—CONSTITUTIONAL LAW.

1. A combination of mercantile dealers to compel another dealing in similar goods to sell at prices fixed by it, or, upon his refusal so to do, to prevent those of whom its members are purchasing customers from selling goods to him, is, upon general legal principles, contrary to public policy and void; and the members of such a combination may, collectively or individually, be, by appropriate injunction, restrained from carrying into effect such purpose as that indicated above.

2. The act approved December 23, 1896 (Acts 1896, p. 68), commonly known as the "AntiTrust Act, " is unconstitutional, as section 4 thereof, declaring that the provisions of the act "shall not apply to agricultural products or live stock while in the possession of the producer or raiser, " makes the act repugnant to that provision of the fourteenth amendment of the constitution of the United States which declares that "no state shall deny to any person within its jurisdiction the equal protection of the laws."

3. There was no error in granting the injunction prayed for, save only as to one of the defendants, and the judgment excepted to being, as to all the others, correct, it will be affirmed, with appropriate direction.

(Syllabus by the Court.)

Error from superior court, Fulton county; J. H. Lumpkin, Judge.

Action by the Jacobs Pharmacy Company against Brown & Allen and others. Judgment for plaintiff. Defendants bring error. Affirmed.

King & Spalding, Smith, Hammond & Smith, and D. A. Loyless, for plaintiffs in error.

Hamilton Douglas, Rosser & Carter, John L. Hopkins & Sons, and Arnold & Arnold, for defendant in error.

FISH, J. The record in this case discloses that prior to the institution of the present action, and since then, there existed in the United States three organizations, known, respectively, as the Proprietary Association of America, the National Wholesale Druggists' Association, and the National Association of Retail Druggists. These associations, occupying each toward the others close and intimate relations, had, among other things, the purpose of keeping up the prices of proprietary medicines, drugs, and other articles usually dealt in by those engaged in the drug trade. A local association was formed in Atlanta, known as the Atlanta Retail Druggists' Association. When it was first organized, Joseph Jacobs, secretary and treasurer of the Jacobs Pharmacy Company, the plaintiff in the present case, was a member of it; but at that time it was distinctly, understood and agreed among its members that it was to undertake no action with reference to the cutting of prices by dealers in drugs, or to control prices of the same. Afterwards the plaintiff, either by its methods of advertising, or certain things that it did in the conduct of its business, gave offense to the members of this association, and charges were prefer red against Jacobs. He then withdrew from the local association. Some of the members of that association were members of one or more of the large associations above referred to. After the retirement of Jacobs, the local concern put in operation a scheme to prevent the pharmacy company from being able to buy goods with which to conduct its business. The main features of that scheme were that the local concern, by circulars, letters, or otherwise, undertook to notify wholesalers and manufacturers throughout the country that the pharmacy company was an aggressive cutter, and to request the persons or concerns addressed not to sell it any more goods; further, to require all salesmen representing the manufacturers or wholesale houses to procure from the local association a card, in order to procure which such salesmen had to sign an agreement not to sell the pharmacy company any goods; and another part of the scheme was to give the manufacturers and wholesalers to understand that, unless they refused to sell the plaintiff any goods, the members of the local association would not buy any more goods from them. In this condition of affairs the plaintiff brought its equitable petition against the defendants, alleging, in substance, the facts set forth above, and praying for damages for alleged injuries to its business already done, and for an injunction to prevent the defendants from carrying into effect the scheme above outlined. The petition charged that the scheme was an unlawful conspiracy to destroy the plaintiff's business, and it more fully set out the manner in which this scheme was to be effectuated, by setting forth as exhibits, marked "A, " "B, " and "C, " certain letters, etc., by means of which the defendants were seeking to accomplish the alleged unlawful purpose which the plaintiff was seeking to restrain. These exhibits were as follows:

"Exhibit A. Atlanta, Ga., March 28, 1901. G. L. Stoney, President; W. B. Freeman, Vice President; R. L. Palmer, Treasurer; W. S. Elkin, Jr., Secretary. Atlanta Druggists' Association. Gentlemen: Inclosed please find a copy of a resolution recently adopted by the Atlanta Druggists' Association. There are fifty-eight retail druggists and three wholesale druggists in this city, and among this number only one, a retailer, is designated as an aggressive cutter. Believing that from a business standpoint, you would prefer the aid and support of fifty-eight (two of the wholesalers are also retailers) legitimate druggists, rather than that of one cutter, we feel sure that it will afford you pleasure to sign the inclosed agreement. Awaiting an early reply, I am yours very truly, [signed] W. S. Elkin, Secretary.

"Exhibit B. We, the undersigned, hereby agree to sell goods of our manufacture (or manufactured by any other house that we may handle) in the city of Atlanta, Ga., and adjoining districts, only to those druggistswho are members of the Atlanta Druggists' Association, and any others who have not been designated as aggressive cutters. We further agree not to sell any goods to department stores in the above-mentioned territory. We reserve the right to cancel this contract by giving notice to the secretary of Atlanta Druggists' Association. Date, ——.

"Exhibit C. A copy of resolution adopted by the Atlanta Druggists' Association, March 22d, 1901: Resolved: (1) That the Atlanta Druggists' Association adopt a card for salesmen reading: 'This is to certify that Mr.

——, representing——, has qualified, and

is hereby recommended to the members of our association. Date, ——. ——, Secretary. (This card is only good for 30 days from date.)' (2) That salesmen's cards shall be required of all salesmen representing as follows: Drug jobbers; patent medicine manufacturers; pharmaceutical houses; proprietary medicine manufacturers; druggists' sundry houses who carry patent and proprietary medicines, proprietary articles, and medicated soaps; manufacturers of surgical supplies; and manufacturers of paper boxes and labels. (3) That the secretary shall issue cards only to salesmen who sign an agreement not to sell directly or indirectly any aggressive cutter or any department store. This agreement to be binding to house represented by salesmen signing same. (4) That where new remedies are being introduced, the salesmen require each purchaser to sign contract to sell such remedy at full printed or implied price. (5) That a copy of these resolutions be furnished each manufacturer who is requested to sign agreement."

The ease was heard before Hon. J. H. Lumpkin, Judge of the Atlanta circuit, upon the application for an interlocutory injunction. A considerable amount of evidence was introduced, concerning which it is sufficient to say that the plaintiff established, substantially, the material allegations of Its petition. It claimed an injunction both upon the general principles of the common law, and also under the terms of what is commonly known as the "Anti-Trust Act" (Acts 1896, p. 68), passed by the general assembly of this state in 1896. The defendants attacked the constitutionality of that act, alleging that it is in violation of the fourteenth amendment of the constitution of the United States, in that it denies to them the equal protection of the law, and deprives them of liberty and property without due process of law, and also abridges their liberties and immunities as citizens of the United States; that it is class legislation, and violates article 1, § 4, par. 1, of the constitution of Georgia. The judge granted the injunction substantially as prayed. After a careful investigation, we are satisfied that he was right in so doing, except in so far as it was made operative against the Lamar-Rankin Drug Company, one of the defendants which was not a member of the local association mentioned above, and against which, therefore, no injunction should have been granted. This minor error or inadvertency has been corrected by an appropriate direction in the judgment rendered by this court. It would not be profitable to set out, or even summarize, the voluminous evidence which was introduced at the hearing. We have already, in effect, stated that the evidence was sufficient to establish favorably to the plaintiff its contentions of fact. We shall therefore confine our discussion to the questions of law involved in the present writ of error. Their nature will be gathered from what has already been said, and from an examination of the headnotes preceding this opinion. We have been relieved of much labor by reason of the fact that the learned and able judge of the trial court filed in the case an elaborate and carefully prepared opinion. What follows is taken almost literally from the same. We omit, save as to extracts from authorities made by him, the use of quotation marks, for the sake of convenience, as we have seen fit to make some omissions, changes, and additions as to the several propositions stated and discussed by his honor. It...