Eastman Kodak Co. v. Southern Photo Material Co.

• Decision Date: 19 December 1923
• Docket Number: 4129.
• Citation: 295 F. 98
• Parties: EASTMAN KODAK CO. v. SOUTHERN PHOTO MATERIAL CO.
• Court: U.S. Court of Appeals — Fifth Circuit

295 F. 98

EASTMAN KODAK CO. v. SOUTHERN PHOTO MATERIAL CO.

No. 4129.

United States Court of Appeals, Fifth Circuit.

December 19, 1923

Alex W Smith, of Atlanta, Ga., and John W. Davis, of Greensburg Kan. (Smith, Hammond & Smith, of Atlanta, Ga., Frank L Crawford, of New York City, and Clarence P. Moser, of Rochester, N.Y., on the brief), for plaintiff in error.

Daniel MacDougald and Spalding, MacDougald & Sibley, all of Atlanta Ga. (Fowler & Fowler, of Knoxville, Tenn., on the brief), for defendant in error.

Before WALKER and BRYAN, Circuit Judges, and GRUBB, District Judge.

BRYAN Circuit Judge.

This is a suit to recover damages alleged to have been sustained by the Southern Photo Material Company, plaintiff, on account of the violation by the Eastman Kodak Company, of New York, defendant, of the Anti-Trust Act of July 2, 1890 (Comp. St. Secs. 8820-8823, 8827-8830). The plaintiff is a Georgia corporation, and had been engaged since 1901, in Atlanta, in the business of selling photographic goods to professional photographers and to amateurs. Its assets exceeded its liabilities by less than $100,000. The defendant is a New York corporation, having its principal place of business in Rochester, N.Y. It is a large manufacturer of photographic goods. Its capital stock is entirely owned by the Eastman Kodak Company of New Jersey, which has a capital stock of $35,000,000.

The defendant has never registered as a nonresident corporation for the purpose of doing business in Georgia, but was accustomed to sell its goods to as many as 126 dealers in that state. Its traveling salesmen visited these dealers, and solicited and procured from them orders, which were transmitted either to its home office, or to its branch office in New York City. The orders transmitted to the home office were subject to acceptance or rejection, but the orders transmitted to the New York City office, if they came from regular customers, were usually filled without reference to the home office. The defendant also employed demonstrators, whose duties were to show both the retail dealers and consumers how to use defendant's goods, and to convince them that they were superior to competing goods. These demonstrators also accepted orders from photographers and other consumers and sent them to nearby retailers to be filled. The defendant also had agents, two of whom resided in Atlanta, whose duties were to visit its customers and to require them to comply with and abide by its terms of sale, according to which goods manufactured by it could not be resold by its customers, except at prices fixed by it, and then only to consumers, but not to other customers or retailers, and could not be sold at all in competition with goods placed on the market by other manufacturers.

The suit was brought in the Northern district of Georgia, and the process of the court, which was issued within that district, was served upon the defendant at its home office in Rochester. The defendant entered its special appearance, traversed the return of the marshal, and pleaded specially to the jurisdiction of the court; but the court overruled the traverse of service and the special plea, and required the defendant to plead to the merits.

At the trial the court admitted, over defendant's objection and exception, the bill of complaint, the answer, the opinion, and the decree of the trial court, which became final, in a suit brought by the government against the defendant for violations of the anti-trust laws of the United States, in which the violations complained of were similar to the violations complained of in this suit. The court charged the jury to limit their consideration of the effect of such evidence to the final decree.

There was evidence that the defendant would not permit its customers, all of whom were required to comply with its terms of sale, to sell other competing, though superior, goods, but that on many occasions the defendant bought out such competing lines of goods, when in its opinion competition rendered that advisable. An instance of this is shown by defendant's refusal to allow its customers to sell 'Artura' paper, which was superior to the paper used for the same purpose and manufactured by the defendant; but finally, on account of the great demand for such paper, the defendant bought out the company which manufactured it, and thereafter allowed its customers to sell it. It is unnecessary to detail the evidence on the question of monopoly, because it is not denied that the jury was warranted in finding that the defendant was maintaining a monopoly.

In 1901, the plaintiff became a regular customer of the defendant, adhered in the main to its terms of sale, and reported several instances of violations by other dealers. In January, 1910, the Eastman Kodak Company of New Jersey purchased the Glenn Photo Supply Co., a retail store in Atlanta, and shortly thereafter the defendant, the New York corporation, refused to make further sales of its goods to the plaintiff, except at list prices, so that the plaintiff was unable to resell such goods at a profit. In April, 1910 the plaintiff purchased the branch store of the Ansco Company in Atlanta, and acquired the right to sell amateur goods to dealers, but not to professional photographers or consumers. The evidence does not disclose that the defendant, at the time it broke off relations with...