Crawford v. COLBY BROADCASTING CORPORATION, 16135.

• Decision Date: 29 November 1967
• Docket Number: No. 16135.,16135.
• Parties: Ruth CRAWFORD, Executrix of the Estate of Percy B. Crawford, Dec., Plaintiff-Appellant, v. COLBY BROADCASTING CORPORATION and Julian Colby, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

387 F.2d 796 (1967)

Ruth CRAWFORD, Executrix of the Estate of Percy B. Crawford, Dec., Plaintiff-Appellant, v. COLBY BROADCASTING CORPORATION and Julian Colby, Defendants-Appellees.

No. 16135.

United States Court of Appeals Seventh Circuit.

November 29, 1967.

Russell C. Dilks, Philadelphia, Pa., Richard M. Keck, Chicago, Ill., for appellant.

M. Robert Sturman, Chicago, Ill., for appellees.

Before HASTINGS, Chief Judge, and KNOCH and CASTLE, Circuit Judges.

CASTLE, Circuit Judge.

Ruth M. Crawford, plaintiff-appellant, brought this suit in the District Court under 15 U.S.C.A. § 15¹ seeking to recover treble damages, costs, and a reasonable attorney's fee, and for injunctive relief against the defendants. The court granted defendants' motion to dismiss plaintiff's amended complaint, and dismissed the action. Plaintiff appealed.

Insofar as pertinent to the issues presented on appeal, the allegations of plaintiff's amended complaint are, in substance, that prior to May 6, 1959, South Shore Broadcasting Company (to which defendant Colby Broadcasting Corporation is the successor by merger) owned and operated radio stations WJOB (an AM station) and WJOB-FM which engaged in broadcasting and in the solicitation of advertising in interstate commerce; that under date of May 6, 1959, South Shore and plaintiff's decedent, Percy B. Crawford, entered into a lease-purchase agreement² under which the corporation's license to operate radio station WJOB-FM was assigned to Crawford; that pursuant to the agreement the station's call letters were to be changed, and they were subsequently changed to WYCA; that "for the purpose of restraining interstate commerce in radio broadcasting in Indiana and Illinois and of obtaining a monopoly of radio broadcasting in Hammond, Indiana, South Shore refused to assign its license without the purchaser agreeing to a covenant not to compete for advertising, other than churches, throughout almost all of WJOB's broadcast pattern in Indiana and Illinois and coerced Crawford into accepting such a covenant", which covenant so unreasonably limited the opportunities of WYCA to obtain advertising revenue as to render WYCA's continued existence impossible without release from the restrictive covenant; that for the aforesaid purposes the defendants Colby Broadcasting Corporation and Julian Colby, the latter a substantial stockholder in and president of the corporation, compelled Crawford's Estate, in order to obtain a release from the restrictive covenant, to agree to make certain additional payments,³ being a percentage of WYCA's advertising revenues, with a minimum monthly payment provided, and committed certain other additional acts, all for the ultimate purpose of driving WYCA out of business as an independent competitive factor in radio broadcasting.

The District Court, relying on this Court's recent decision in Crest Auto Supplies, Inc. v. Ero Manufacturing Company, 7 Cir., 360 F.2d 896, grounded its dismissal of the action on the applicability of the in pari delicto doctrine. The court appraised the allegations of the amended complaint as:

"* * * revealing the voluntary character of decedent\'s action in entering into the contract initially, he accepted the restrictive covenant to procure the assignment of the license. No facts are alleged indicating he was compelled to purchase the license in the first instance, with the restrictive covenant. That is the transaction which he entered into voluntarily, and therefore is under the ban of the pari delicto doctrine."

In this connection, the court concluded that the allegation that defendants "coerced Crawford into accepting such a covenant" is in the nature of a conclusion of law which the motion to dismiss does not admit. But, wholly apart from the question of whether, in view of the context in which such allegation is made, the court was correct in so concluding, the availability of the in pari delicto defense requires something more than that the party against whom it is asserted merely accepted a contract containing an illegal restraint instead of refusing to deal. Simpson v. Union Oil Co., 377 U.S. 13, 84 S.Ct. 1051, 12 L.Ed.2d 98.

The District Court's reliance on Crest Auto Supplies, Inc. v. Ero Manufacturing Company, supra, was therefore misplaced. In both Crest and Perma Life Mufflers, Inc. v. International Parts Corporation, 7 Cir., 376 F.2d 692, also cited by defendants, neither of which was decided on the bare bones of a complaint,⁴ the plaintiffs were shown to have engaged in conduct having the effect of encouraging and perpetuating the "wrong" with respect to which they...