Chamber of Commerce v. Federal Trade Commission

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Citation13 F.2d 673
Docket NumberNo. 256.,256.
Decision Date13 July 1926

David F. Simpson, of Minneapolis, Minn. (Lancaster, Simpson, Junell & Dorsey, of Minneapolis, Minn., on the brief), for petitioners.

Adrien F. Busick and Charles Melvin Neff, both of Washington, D. C. (W. H. Fuller, of Washington, D. C., on the brief), for respondent.

Before STONE and VAN VALKENBURGH, Circuit Judges, and PHILLIPS, District Judge.

STONE, Circuit Judge.

This is an original statutory proceeding to review a "cease and desist" order of the Federal Trade Commission.

I. The Pleadings.

The pleadings consisted of (1) the complaint, (2) motions and answer of the Chamber of Commerce and the named directors, officers and members, (3) motions and answer of the Manager Publishing Company and John F. Fleming, (4) motions and answer of John H. Adams, and (5) application for dismissal by all of the respondents.

(1) The Complaint.

The complaint was in two counts. The substance thereof may be stated as follows: It was against "the Chamber of Commerce of Minneapolis; the officers, board of directors, and members of the Chamber of Commerce of Minneapolis, Manager Publishing Company; John H. Adams; and John F. Fleming, all hereinafter referred to and named as respondents herein."

It named, as respondents, fourteen individuals alleging they were officers or directors of said Chamber of Commerce and thirteen of them to be members thereof, and that "said respondent members constitute a class so numerous as to make it impractical to name them all as parties respondent herein, but those designated herein are fairly representative of the whole."

It alleged that the Chamber of Commerce (hereinafter called Chamber) was a "non-stock or membership corporation organized and existing for the profit of its members" and conducting a grain market for the exclusive use of its members wherein approximately 200,000,000 bushels of grain was dealt in annually by them, and that it dealt in "valuable business and commercial information consisting chiefly of price quotations of various kinds of grain and other market news." That much of the grain so dealt in by the members on the floor of the Chamber was interstate commerce grain and that the market quotations and news was sent and received through interstate commerce instrumentalities to and from other states. That the members were governed in their dealings by rules and regulations of the Chamber so that their interstate grain transactions were controlled thereby. That the grain market furnished by the Chamber for the exclusive use of its members served six states and held a monopoly of such business.

That the respondent, Manager Publishing Company, is a corporation publishing a grain trade paper (The Co-operative Manager & Farmer) which circulates in the trade territory tributory to Minneapolis and respondents John H. Adams and John F. Fleming are stockholders therein and editors thereof. That the Equity Co-operative Exchange (hereinafter called Equity) is a co-operative association or corporation with offices in various states and having a membership of about seven thousand grain raisers, shippers and dealers living in various states of the Northwest. That such association is the receiving and selling agent for grain shipped to it by its members, much of which is interstate shipments. That it operates terminal and country elevators in various states. That it deals, also, in grain consigned to it in interstate commerce by nonmembers and on its own account. That it is engaged, also, in disseminating market information. That it conducts its business on the basis of paying "patronage dividends," which means division of net profits among its patrons in proportion to patronage.

That being barred from the Chamber and other regular markets because of its "patronage dividend" character, the Equity established (with others) the St. Paul Grain Exchange (hereinafter called Exchange) at St. Paul in 1914 and became a member thereof. That the St. Paul Grain Exchange is a non-stock or membership corporation conducting a grain market and permitting its members to allow patronage dividends. That its members are engaged in dealing in various grains.

That the members of the Equity and of the Exchange are in business competition with the members of the Chamber. That a great portion of the grain dealt in by the various members of each is interstate commerce grain. That respondents are and for more than three years have been in a conspiracy to destroy the Exchange and the business of the Equity and its members for the purpose of perpetuating the monopoly of the Chamber and its members.

That this conspiracy has been and is being carried out by a campaign of defamation, false litigation, oppression and boycott. The defamation consisting (1) of publication, in the above trade paper and other publications, and circulation among patrons and prospective patrons, of the Equity and of the Exchange, of false statements concerning the financial responsibility and business methods of the Equity and of the Exchange; and (2) similar false statements by the traveling solicitors, agents and employees of many of the respondent members of the Chamber. The false litigation consisting of instigating and carrying on, in 1914 and 1915, three designated actions against the Equity and other members of the Exchange, these actions being one brought in the United States District Court for Minnesota by J. Emerson Greenfield and Samuel Crumpton (partners as Greenfield & Crumpton); another in a state court of North Dakota, by Fred Schmidt, J. Emerson Greenfield and Samuel Crumpton; and another, in the same state court, by the State of North Dakota ex rel. Henry J. Linde, Attorney General. The oppression consisting in refusing the Exchange and its members the daily market quotations of the Chamber, which it disseminates to nonmembers of the Chamber, and in inducing other terminal markets to refuse their like quotations. The boycott consisting in members of the Chamber refusing, under compulsion of certain rules adopted by the Chamber for that purpose, to buy grain from the Equity.

That said conspiracy is further being executed under compulsion and by means of certain rules, regulations and customs of the Chamber and its members, which discriminate against nonmembers; depress prices paid for grain bought from producers; impose arbitrary and unearned charges on "on track" grain at country points; discriminate in favor of grain shipped from certain other terminal markets; establish unreasonably high commission rates; and prevent the members of the Chamber from transacting business on a true competitive basis or a "patronage dividend" basis.

That such conspiracy is being further executed through contracts binding country shippers to ship all of their grain to members of the Chamber who finance such shippers.

(2) Motions and Answer of the Chamber et al.

These motions were to dismiss, to strike and for orders that no issue of fact be joined as to certain parts of the complaint. The motion to dismiss was (1) to dismiss the complaint generally, (2) to dismiss generally as to John B. Gilfillan, Jr., and Asher Howard, and (3) to dismiss as to the Chamber and the individuals named as secretary and "as officers and directors thereof." The motion to strike was divided into three paragraphs aimed at designated portions of the complaint as follows: (1) Those touching market quotations, the boycott charge and the charge as to certain rules of the Chamber which, in general, the petition alleged as preventing competition and being discriminatory; (2) those charging contracts for exclusive shipment from shippers financed by members of the Chamber; (3) those charging defamation by publications and by solicitors, agents and employees of members of the Chamber. The motion for orders that no issue of fact be joined or evidence received was in three paragraphs and related to the same matters as the motion to strike.

The bases of the motions were (1) that the filing of, the hearing and order on, the complaint denied due process under the Fifth Amendment to the Constitution; (2) that the Federal Trade Commission is not a fair and impartial tribunal to hear and determine the matters covered in its complaint which was based on ex parte information; (3) that the Commission is without jurisdiction to make orders concerning the methods of business of the Chamber because (a) the Chamber is not organized to carry on business for the profit of itself or its members, (b) it does not deal in grain nor is it engaged in commerce but merely furnishes a market place for its members and does not affect interstate commerce in any way, (c) dissemination of market quotations and reports is not interstate commerce and withholding same from the Exchange, located in Minnesota also, does not involve nor interfere with interstate commerce, (d) the Chamber exists in accordance with Minnesota statutes authorizing its organization and expressly endowing it with control over, adoption and enforcement of rules governing the admission, control and discipline (even to expulsion) of its members; that all of the rules covered by the complaint are authorized by the state statute and are not within the control of the Commission and Congress has not given such control to the Commission; (4) the complaint fails to state a cause of action under the act creating the Commission, either generally or in the particulars following: (a) In so far as it relates to the organization, existence, functions, rules and resolutions of the Chamber, especially as to charges respecting market quotations, boycott and rules which prevent competition and discrimination, (b) the practice of members of the Chamber advancing money to grain shippers and contracting, in connection therewith, for shipment of grain by those shippers to them,...

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