Dr. Miles Medical Co. v. Platt

• Decision Date: 19 January 1906
• Docket Number: 27,492,27,588.,27,569
• Citation: 142 F. 606
• Court: U.S. District Court — Northern District of Illinois
• Parties: DR. MILES MEDICAL CO. v. PLATT. WORLD'S DISPENSARY MEDICAL ASS'N v. SAME. HARTMAN v. SAME.

142 F. 606

DR. MILES MEDICAL CO. v. PLATT. WORLD'S DISPENSARY MEDICAL ASS'N v. SAME. HARTMAN v. SAME.

Nos. 27,492, 27,569, 27,588.

United States Circuit Court, N.D. Illinois, Eastern Division.

January 19, 1906

F. F Reed and E. S. Rogers, for complainants.

A. E Gammage and Chas. E. Soelke, for defendant.

KOHLSAAT Circuit Judge.

The first bill above mentioned is to restrain interference with complainant's system of marketing medicines made under secret formulas, on the theory that the complainant is the exclusive owner of the formulas, and has an absolute monopoly in the articles. The second action above is brought for similar relief, but the system of marketing is different. The third suit is similar to the first. The suits relate to what is known as the direct contract plan of marketing proprietary preparations. In the first case the wholesale contract is made, providing that the wholesale agent, in consideration of being supplied with the remedies at certain prices, agrees to sell the same only at certain prices, and only to people whom the Dr. Miles Company shall previously designate, and to fill out proper cards and slips, which are inclosed in packing cases, making the number on the slip correspond with the number on the package, and filling out in the body of the card the name of the purchaser. The names of the persons appearing on the card are those to whom only the company permits its goods to be sold by wholesalers. The retail agency contract provides, in consideration of being furnished with the preparations, both that the retail dealer will sell only at certain prices, and that he will not sell to any wholesale or retail dealer who has not entered into a similar contract with the company. In the second case the system differs somewhat from the foregoing. The association enters into contracts with wholesale distributors of its preparations, the latter agreeing to sell only at certain prices, and not to sell to persons whom the association may designate as not entitled to receive them; the purpose being to secure uniform prices, both wholesale and retail, enabling small dealers to compete successfully with large dealers preventing demoralization of the trade by cutting the prices for advertising purposes, and to keep the preparations out of the hands of objectionable persons. The third case is similar to the first.

In the first case it is alleged in the bill that the defendant, Platt, at one time signed the retail agency contract, but that it was afterwards violated by him and canceled. Since then, no being an authorized retailer, he is not entitled to purchase complainant's goods on any terms, unless he agrees thereto, which he declines and refuses to do. It is then alleged that defendant, by personating a retail agent of complainant, and by other fraudulent practices, has caused complainant's wholesale agents to violate their contracts and supply the goods to him, and in collusion with some of the retail agents has also procured the goods, and by fraud, deception, persuasion, threats, and coercion has procured complainant's agents to violate the terms of their contract; that his methods are various, and consist in inducing retail dealers to sign contracts and deliver them to jobbers and wholesale druggists who contract with the complainant, then to order the remedies through them and turn them over to the defendant, in violation of the terms of the retail contracts; also of inducing and persuading retail druggists, under contract with complainant, to procure from jobbers and wholesale druggists, also under like contract, such remedies, and then to sell and supply them to the defendant in violation of the contract with complainant, and by threats, coercion, intimidation, and duress causing wholesale druggists under contracts with complainant to break and violate the same. Defendant then sells the remedies at cut rates at his own store and supplies the same surreptitiously to others, who have not signed the contracts; thus demoralizing and injuring complainant's trade.

In the other two cases it is alleged that defendant is well advised of the system of contracts and sales of the complainant, and maliciously procured large quantities of complainant's medicines selling them at his own establishment at cut prices and supplying them in large quantities to dealers not entitled to receive them; that, upon learning of the conduct of the defendant, complainant designated defendant as a person not entitled to deal in its preparations. Therefore defendant cannot lawfully obtain complainant's preparations, but defendant has by fraud and persuasion and in other surreptitious ways procured large quantities of complainant's preparations from complainant's agents, in violation of their contracts with the complainant, and has also harassed and annoyed complainant's agents by constant calls upon them and demands for complainant's goods by threats, suits, and legal proceedings, in an endeavor to cause them to violate their contracts with complainant and supply him with its preparations. That defendant sells the goods so obtained to others, who are designated by complainant as not entitled to deal therein; that defendant has instituted a pretended suit in equity in the circuit court of Cook county, Ill., to compel complainant's agents to violate their contracts to supply complainant's goods to him; that this conduct is malicious and for the purpose of injuring complainant and destroying its system of contracts and method of sales. The bill seeks to enjoin defendant from inducing breaches of said contracts and prevent defendant from harassing and annoying complainant's agents by coercion, threats, legal proceedings or otherwise. In the state court an injunction was refused by Judge Tuley, who sustained the lawful nature of the direct contract plan involved therein.

Exceptions are taken to certain allegations of the answer as immaterial and impertinent. These exceptions, in substance, are as follows: Complainant unlawfully, fraudulently, and maliciously combined, conspired, and confederated with a number of druggists to unlawfully and fraudulently fix and maintain an exhorbitant and arbitrary price for all kinds of medicines, remedies, and cures which are manufactured and sold in the United States under secret processes, and to unlawfully destroy, stifle, restrict, and prevent competition in the sale thereof, with intent thereby to compel the public to pay a higher price for such medicines, remedies, and cures than it would otherwise by required to pay. Pursuant to such conspiracy said persons put in force the contract, serial number, and card system, and put in force and published all over the country certain blacklisting and boycotting circulars, pamphlets, and lists containing the names of those drug dealers who refused to sign the contracts and become parties to the conspiracy; and dealers who have entered into the contracts and consented to be governed by such system are warned against selling any of such medicines to any persons named in such blacklisting circulars. That the real object and purpose of said system is to maintain arbitrary and exhorbitant prices for all medicines, etc., manufactured under secret process, to prevent and stifle competition and exact a higher price than the public would otherwise be required to pay. That complainant unfairly discriminates among its customers, surreptitiously supplying with its medicines certain, but not all, of its customers and patrons who have signed such contracts, but who, as complainant well knows, have openly violated the contracts by cutting prices. That defendant signed the contract, but was compelled and induced to do so by threats, intimidation, coercion, and under duress by reason of said conspiracy. Defendant's inability to obtain such medicines is entirely due to the existence of the unlawful conspiracy, and complainant and its wholesalers refuse to sell any thereof to the defendant, and by means of threats, duress, undue influence, blacklisting, boycotting, coercion, and other unlawful ways and means, prevent defendan...