City of Atlanta v. Chattanooga Foundry & Pipe Co.

• Decision Date: 05 May 1900
• Docket Number: 599.,647
• Citation: 101 F. 900
• Parties: CITY OF ATLANTA v. CHATTANOOGA FOUNDRY & PIPE CO. MANION et al. v. SAME.
• Court: U.S. District Court — Eastern District of Tennessee

101 F. 900

CITY OF ATLANTA v. CHATTANOOGA FOUNDRY & PIPE CO.

MANION et al. v. SAME.

Nos. 647, 599.

United States Circuit Court, E.D. Tennessee, Southern Division.

May 5, 1900

Pritchard & Sizer, for Manion & Co.

C. P Gore, L. A. Dean, Westmoreland Bros., and J. L. Faust, for city of Atlanta, Ga.

Brown &amp Spurlock, for Chattanooga Foundry & Pipe Co.

CLARK District Judge.

These suits are brought to recover damages under section 7 of the so-called 'Anti-Trust Act' of congress of July 2 1890, which reads as follows:

'Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act, may sue therefor in any circuit court of the United States in the district in which the defendant resides or is found, without respect to the amount in controversy, and shall recover three fold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee.'

The first-named case is a suit on behalf of the city of Atlanta, Ga., a municipal corporation, and the second on behalf of plaintiffs, who aver that they are contractors engaged in the business of furnishing and laying gas, water, and sewer pipes in the city of New Orleans, La. The defendant heretofore has been, and now is, engaged in the business of manufacturing and selling cast-iron pipe and fittings, used for the purposes of public drainage and sewerage, and by gas and water companies in the business of operating gas and water plants. The declarations in the two cases vary slightly in the form of statement of the case. Both suits are actions on the case, and, in substance, proceed upon the ground that the defendant entered into an unlawful trust or combination with others for the purpose of monopolizing trade in violation of the anti-trust act. The trade combination or trust complained of here was involved in Addyston Pipe & Steel Co. v. U.S., 175 U.S. 211, 20 Sup.Ct. 96, Adv.S.U.S. 96, 44 L.Ed.--, and is there fully described. The plaintiffs in each case became purchasers of the manufactured product of the defendant in large quantities, and at prices set out in the declarations. It is charged with sufficient detail that by reason of the unlawful combination and trust contract entered into, the defendants were enabled to advance, and did advance, the price on their manufactured goods, and that the plaintiffs were, in consequence, compelled to pay an exorbitant and unfair price, which is called a 'bonus,' on the goods purchased. The estimated difference between the just and fair market price of the goods and the price actually paid is stated in figures, and the specific damages claimed are laid at this difference between the fair price of the goods and the trust price paid, the declarations concluding with an averment of the right to increase the actual damages sustained threefold, as authorized by the act. Besides other pleas, the defendant interposes as a defense the state statute of limitations of one and three years, as found in the Code of Tennessee (Shannon's Revisal, Secs. 4469, 4470,-- the former section prescribing a limitation to actions for statute penalties, injuries to the person, and other civil wrongs, not necessary to be noticed; and the latter preseribing a limitation period of three years for injuries to property, real and personal. To these pleas the plaintiffs demur upon the ground that section 1047 of the Revised Statute applies to the actions, and that the state statute is applicable.

The case, in respect of the issues thus presented, turns in part on the distinction between a penalty, as such, imposed by statute for a breach of its provisions, by way of punishment for the act, and in the public interest on the one hand, and a private remedy conferred on a person specially injured by the unlawful act, and by way of compensation for the injury sustained, on the other. If the action authorized by section 7 is a penalty in the sense indicated, it might be conceded for the moment, or for the purposes of the question now to be decided, that section 1047 of the Revised Statutes would be applicable, and under that view the demurrer would be well taken. On the other hand, if the suit is not in its nature and substance a penal action, but a civil remedy for a private injury, compensatory in its purpose and effect, the action is subject to the state statute of limitations applicable to cases of this class, if there be such a statute. Campbell v. City of Haverhill, 155 U.S. 610, 15 Sup.Ct. 217, 39 L.Ed. 240; Brady v. Daly, 175 U.S. 148, 20 Sup.Ct. 62, Adv.S.U.S. 62, 44 L.Ed.-- . In the last case cited Mr. Justice Peckham, giving the opinion of the court, said:

'The court below was, as is stated in the opinion, somewhat influenced in its decision of this question by the belief that, if this were not a penal statute, there was no federal statute of limitations applicable to it, and said that it could hardly be supposed that it was the intent of congress to permit such a statutory rate of damages to run without federal statutory limitation. If there were no such federal statute, then the state statute would apply. Although not an action to recover a statutory penalty or forfeiture, still, in the absence of any federal statute of limitations, it would be limited by the limitation existing for the class of actions to which it belongs in the state where the action was brought. Campbell v. City of Haverhill, 155 U.S. 610, 614, 15 Sup.Ct. 217, 39 L.Ed. 270.'

See, also, Cockrill v. Butler (C.C.) 78 F. 679.

Section 1047 of the Revised Statues prescribes limitations as follows:

'No suit or prosecution for any penalty or forfeiture, pecuniary or otherwise, accruing under the laws of the United States, shall be maintained, except in cases where it is otherwise specially provided, unless the same is commenced within five years from the time when the penalty or forfeiture accrued: provided, that the person of the offender, or the property liable for such penalty or forfeiture, shall, within the same period, be found within the United States; so that the proper process therefor may be instituted and served against such person or property.'

It is necessary, therefore, to determine the question whether the suits are essentially penal or civil actions in their object and result. This question whether the action authorized is intended as a punishment or as compensation obviously involves the distinction between a civil remedy and a penal action in its primary or international meaning, this being the sense which was under consideration in the leading case of Huntington v. Attrill, 146 U.S. 657, 13 Sup.Ct. 224, 36 L.Ed. 1123, in which Mr. Justice Gray, for the court, said:

'In the municipal law of England and America, the words 'penal' and 'penalty' have been used in various senses. Strictly and primarily, they denote punishment, whether corporal or pecuniary, imposed and enforced by the state for a crime or offense against its laws.'

In the previous case of Wisconsin v. Pelican Ins. Co., 127 U.S. 265, 8 Sup.Ct. 1370, 32 L.Ed. 239, Mr. Justice Gray, for the court, had said:

'The rule that the courts of no country execute the penal laws of another applies not only to prosecutions and sentences for crimes and misdemeanors, but to all suits in favor of the state for the recovery of pecuniary penalties for any violation of statutes for the protection of its revenue, or other municipal laws, and to all judgments for such penalties.'

In Huntington v. Attrill (1893) App. Cas. 150, before the privy council of England, precisely the same question was in judgment as that involved and decided in Huntington v. Attrill, supra, the suit being between the same parties. Lord Watson, delivering the judgment of their lordships, quoted the above passage from Wisconsin v. Pelican Ins. Co., rendering in italics the words 'but to all suits in favor of the state,' and then went on to say:

'Their lordships do not hesitate to accept that exposition of the law which, in their opinion, discloses the proper test for ascertaining whether an action is penal within the meaning of the rule. A proceeding, in order to come within the scope of the rule, must be in the nature of a suit in favor of the state whose law has been infringed. All the provisions of municipal statutes for the regulation of trade and trading companies are presumably enacted in the interest and for the benefit of the community at large; and persons who violate these provisions are, in a certain sense, offenders against the state law, as well as against individuals who may be injured by their conduct. But foreign tribunals do not regard these violations of statute law as offenses against the state, unless their vindication rests with the state itself, or with the community which it represents. Penalties may be attached to them, but that circumstance will not bring them within the rule, except in cases where these penalties are recoverable at the instance of the state, or of an official duly authorized to prosecute on its behalf, or of a member of the public in the character of a common informer. An action by the latter is regarded as an actio popularis pursued, not in his individual interest, but in the interest of the whole community.'

In Dicey, Confl. Laws, p. 220, the general proposition is laid down (as rule 40) that the high court of justice in England cannot entertain an action for the recovery of a penalty due under the laws of a foreign country, or an action on a foreign judgment for such penalty. Upon the authority of leading cases cited, the rule is then commented on as follows:

'What is a penal law? The application of rule 40 raises the difficult question, when is a law to be

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