Dennehy v. McNulta

• Decision Date: 02 May 1898
• Docket Number: 424.
• Citation: 86 F. 825
• Parties: DENNEHY et al. v. McNULTA et al.
• Court: U.S. Court of Appeals — Seventh Circuit

86 F. 825

DENNEHY et al. v. McNULTA et al.

No. 424.

United States Court of Appeals, Seventh Circuit.

May 2, 1898

The appellants filed claims for allowance against the funds in court in the consolidated causes against the Distilling &amp Cattle-Feeding Company, of which sufficient description appears in the case of Distilling Co. v. McNulta (decided by this court Jan. 4, 1897) 46 U.S.App. 578, 23 C.C.A. 415, and 77 F. 700.

(1) The claims of Dennehy & Co. were presented by petition in their name, and consisted of 91 written instruments, called rebate certificates or vouchers, issued by the Distilling &amp Cattle-Feeding Company to Charles Dennehy & Co., aggregating the sum of $5,238.23. The instruments are of various dates numbers, and amounts, and in form as follows, with appropriate insertion in the blank spaces, respectively:

'Peoria, Ill.,--,18900. No.--

'Subject to the conditions named herein, and for the purpose of securing the continuous patronage of the within-named purchaser, the successors and assigns of the same, for its products, the-- Distilling & Cattle-Feeding Co., six months from the date of this purchase voucher, will pay to Charles Dennehy & Co., of Chicago, purchaser,-- dollars ($--), being a rebate of seven cents per proof gallon on-- proof gallons of the Distilling and Cattle-Feeding Company's product purchased this day. This voucher will be valid and payable only upon condition that the above-named purchaser, the successors and assigns of the same, from the date of this voucher to the time of its payment, shall have bought their supply of such kinds of goods as are produced by the Distilling and Cattle-Feeding Company, and all compounds thereof, exclusively of one or more of the dealers named on the back thereof, until further notified, and shall also have subscribed to the certificate on the back hereof.

'Distilling and Cattle-Feeding Co., 'By J. B. Greenhut, President.

'Not transferable nor negotiable.

'When due, forward to the German-American National Bank of Peoria, Ill., where this voucher is payable without exchange or other charge.'

Printed upon the back is the following indorsement: 'It is hereby certified that from the date of this voucher to the maturity thereof the within-named purchaser, and the successors and assigns of the same, have purchased all of their supply of such kind of goods, and their compounds, as are produced by the Distilling and Cattle-Feeding Co., exclusively from one or more of the dealers named hereon. ' Appended thereto is a list of 61 dealers or distillers referred to, variously located throughout the United States.

(2) The petition of Moses Salomon sets up that he is the assignee of sundry judgments rendered in justices' courts against the Distilling & Cattle-Feeding Company, and also the holder of vouchers on which said Judgments were rendered; but it appeared, and was undisputed, that appeals from the judgments were perfected and pending, whereby the judgments became ineffective; and thereupon the petitioner introduced 47 certificates or vouchers issued to Stein Bros., of various dates, numbers, and amounts, aggregating the sum of $3,604.64, and similar in form and tenor to the instrument above described, except that in a portion thereof the rebate was named at 'five cents per proof gallon,' instead of seven cents, as recited in the sample form, and the words, 'Not transferable nor negotiable,' do not appear, from the record, to have been printed or stamped thereon.

It is not claimed that the payees or holders in either case complied in any respect with the conditions named in the voucher. On the contrary, it appears, and is conceded, that there was neither compliance nor attempt to perform the condition. It further appears that no interest is in fact asserted by either of the payees named in the vouchers; but that (1) the Dennehy & Co. vouchers were indorsed in blank, without recourse, by that corporation, delivered to the United States Distilling Company, and were subsequently delivered to one G. E. Jones, for whose benefit, as finally divulged, the claim was filed in the name of the original payees; and (2) that the vouchers issued to Stein Bros. were by them indorsed payable to the order of one Joseph Wolf, without recourse, and by the latter indorsed in blank, and delivered to the petitioner, Salomon, an attorney at law, under an arrangement that Salomon should bear all expenses, and receive one-half of any amount realized.

The hearing upon the claims was before a special master, who reported to the circuit court 'the testimony and evidence, with his conclusions thereon. ' Aside from the matters above recited, voluminous testimony was introduced on behalf of the claimants, directed to showing that the Distilling & Cattle-Feeding Company, as organized and conducted, was a combination of a large percentage of the distillers of the country,-- asserted to be 85 per cent. thereof,-- constituting an illegal trust, monopolizing and controlling the product of the country in that line to the extent of nearly 90 per cent.; that the system of rebate vouchers in evidence was entered into and designed to carry out and secure the purposes of the monopoly; that, through this control of the major share of distillery products, it was deemed a business necessity on the part of Dennehy & Co., Stein Bros., and other dealers throughout the country, to make all their purchases in that line from the distributors of the combination; or, as stated in the argument of their counsel, it became 'impracticable and detrimental to their trade to buy liquors elsewhere,' in the face of the monopoly; but it also appears that an independent and accessible supply existed in fact. The conclusions of the special master were against the allowance of the claims in both cases. Exceptions filed by each claimant were subsequently heard and overruled in the circuit court, the report of the special master in each case was confirmed, and final decree entered accordingly. The opinion thereon, by Showalter, Circuit Judge, is reported in 77 F. 265.

Moses Salomon, for appellants.

Levy Mayer, for appellees.

Before WOODS and JENKINS, Circuit Judges, and SEAMAN, District Judge.

SEAMAN District Judge, after stating the case as above, .

Passing technical objections to consider this controversy upon the merits, it is...