Dothan Oil Mill Co. v. Espy

• Decision Date: 23 January 1930
• Docket Number: 4 Div. 458.
• Parties: DOTHAN OIL MILL CO. ET AL. v. ESPY ET AL.
• Court: Alabama Supreme Court

127 So. 178

220 Ala. 605

DOTHAN OIL MILL CO. ET AL. v. ESPY ET AL.

4 Div. 458.

Supreme Court of Alabama

January 23, 1930

Rehearing Denied March 20, 1930.

Appeal from Circuit Court, Houston County; H. A. Pearce, Judge.

Bill for injunction by Leo Espy and others against the Dothan Oil Mill Company and others. From a decree overruling a demurrer to the bill, respondents appeal.

Affirmed.

Sufficiency of injunction bond held not presented on appeal from decree overruling demurrers to bill.

The complainants (appellees here), three in number, are, as the bill avers, engaged separately in the business of ginning cotton for the producers in the locality of their respective places of business, "and accept or take cotton-seed from cotton so ginned at a reasonable and fair value in payment of the ginning charges," paying the producer the difference, and also engaged in the business of buying and selling cotton seed.

The respondents (appellants), thirty or more in number, in different localities in this state, respectively and separately are engaged in the business of buying and crushing cotton seed, manufacturing therefrom cotton-seed oil, and other by-products of cotton seed, and selling the same to the public, or such as use and handle such products.

The bill further alleges that, in the month of July, 1928, the respondents, with others, entered into a conspiracy and an unlawful combine in the restraint of trade, in respect to the business of buying and selling cotton seed, and to control the price thereof, so that they could thereby purchase cotton seed at the price fixed by them. And in furtherance of said conspiracy and said combine, "entered into what they term a 'Trade Practice Agreement,"' a copy of which is attached to and made a part of the bill.

That the "respondents in furtherance of said conspiracy and in the execution thereof, agreed among themselves the price to be paid for cotton-seed throughout the State of Alabama in that the said respondents agree to pay a specific price for cotton-seed at all points in Alabama, the buyer paying the freight on said seed to its (their) respective mills where the same is shipped, and as a part of said unfair practice and in furtherance of said monopoly, refused to buy cotton-seed except on weights and quality at mill destination, regardless of the true weights and quality of cotton-seed so shipped from the point bought and have entered into a specific agreement as to the amount of brokerage the seller should pay for the sale of such cotton-seed specifically limiting the amount to be paid on all cotton-seed from wagons, and from gins to the amount of $3.00 per ton, the same to include storage, handling loading, loss in weight, and all other charges of every kind, and have limited the payment of commission to 50 cents per ton of seed in carload lots, notwithstanding, the said respondents pay no part of said commission, and the seller in order to dispose of his seed must comply with the provisions enumerated in said exhibit 'A,' for complainants aver that said respondents are the only buyers in Alabama of any appreciable amount of cotton-seed offered for sale in the State, and in pursuance of the provisions of exhibit 'A,' *** the respondents have agreed among themselves, or among themselves and other buyers of cotton-seed, not to buy cotton-seed in carload lots in the State of Alabama, unless the seller will sell his seed and accept weights and qualities thereof as fixed by the buyer at his or its mill, and thereby created, operated, aided or abetted a trust combine or monopoly in the purchase of cotton-seed in the State of Alabama."

That said "Good Practice," as set forth in said exhibit, is for the benefit of the respondents, and enables them to control the price and buy seed at the price fixed by them, and forces the producer and others who deal in this product to sell at such price, regardless of its fair value.

That because of said conspiracy, complainants are unable to sell their cotton seed to respondents or in the open market at any other price than that fixed "by said unlawful conspiracy or combine in restraint of trade, regardless of the true and fair value of said seed"; that said unlawful conspiracy and combine by respondents creates and maintains a fictitious price for cotton seed, in that none of the respondents will offer or pay more than the price fixed by them, and in furtherance of said combine, the respondents, when said price is fixed, inform all sellers of cotton seed what will be paid, and, by reason of said combine and agreement in restraint of competition, complainants are unable to sell and dispose of their cotton seed at any other price.

That respondents, in furtherance of said monopolistic combine, have refused to accept for storage cotton seed on call for account of others, or to buy cotton seed for future shipment beyond fifteen days from the date of purchase, the purpose of such agreement being to prevent complainants and the producers of cotton seed from storing, or defendants from receiving, for prospective purchaser, and to limit the right to buy cotton seed for future delivery, where such shipment cannot be made within fifteen days from such purchase, thereby reducing and stifling competition in the price to be paid, and because the respondents constitute practically all the buyers of cotton seed for oil mills in the state, said agreement prevents the complainants and others from so selling, thereby aiding in creating a trust combine or monopoly in the purchase of cotton seed "to the great injury and damage of complainants and other buyers and sellers of cotton-seed, and the producers thereof," and in restraint of the right to contract.

That the term "Unit," as used in paragraph 2 of exhibit "A," which provides that "the price paid for cotton-seed or charged for the products thereof is a matter of individual judgment to be determined by each unit concerned. No unit is or should be under obligation to change or maintain its prices to meet the wishes or views of any other unit or group of units," and "alludes to and governs the said respondents and other oil mills in Alabama as a unit."

That respondents "in furtherance of said unlawful combine in restraint of trade, have agreed as set forth in Section 12 of said exhibit 'A,' and in the execution of said provision have agreed upon and adopted a uniform sales contract form for all purchases of cotton-seed, which the seller of cotton-seed must conform to in order to sell *** to any member of said unlawful combine thereby created, operated, aided or abetted a trust combine or monopoly in the purchase of cotton-seed in the State of Alabama, to the great injury and damage of complainants and other producers or dealers in cotton-seed."

That "there are thousands of producers of cotton-seed in the State of Alabama, and in and about the vicinity and place of business of complainants *** who sell their cotton-seed to complainants and others engaged in a similar business in the State of Alabama, and if the respondents are permitted to continue to carry out the unlawful conspiracy and combine *** and force complainants to sell their seed to them under the rules and provisions contained in said exhibit 'A,' these complainants will be unable to pay the producers of cotton-seed in the State of Alabama, as large a price as they would and could pay the producers of such cotton-seed but for the alleged conspiracy and methods of doing business by respondents, to the irreparable damage of complainants and said producers." (Italics supplied.)

On information and belief the bill charges "that the respondents and their co-conspirators in furtherance of said combine and restraint of trade, have set up what is termed an 'Interpretation Committee,' the functions and duty of which is to try and determine all grievances against any member of said conspiracy for the violation of any of said provisions contained in exhibit 'A' to the bill, *** and the purpose thereof is to restrain any member of said conspiracy from in any wise breaching said provisions in order that said conspiracy may be fully consummated, and respondents enabled to purchase cotton-seed at a price fixed by them."

The paper attached as Exhibit A to the bill appears on its face to be a set of resolutions at a trade practice conference of "The Cotton Oil Mill Division of the Interstate Cotton-seed Crushers Association, held at Memphis, Tennessee, on July 24, 1928," the preamble thereof asserting that the oil mills are "an agency which buys the cotton-seed and manufactures it into products of great value to mankind, fill a necessary and proper function in relation to a basic agricultural product, and are entitled to a fair return for such services. They owe a duty alike to the farmer who produces the seed and to the consuming public which buys the products thereof. That duty includes the obligation to pay a fair price for the raw material, to deal fairly with labor, to manufacture efficiently, to eliminate waste, to sell the products at a fair price to develop new uses, to approve and encourage sound and fair trade practices and to condemn and prevent bad and unfair practices. In order to perform that duty, it is advisable to encourage proper and ethical principles in the industry, to the end that competition may be open and constructive, and not secret and destructive, With these purposes in mind, the mills therefore declare that it is good practice in the operation of crushing cotton-seed to abide by the following principles:

"1-Whereas there has been discrimination in the prices paid for cotton-seed and in the prices charged for the products thereof, and

"Whereas the Congress of the United States in passing the Clayton Act and many

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