Federal Trade Commission v. Wallace

• Decision Date: 09 February 1935
• Docket Number: No. 382.,382.
• Citation: 75 F.2d 733
• Parties: FEDERAL TRADE COMMISSION v. WALLACE.
• Court: U.S. Court of Appeals — Eighth Circuit

75 F.2d 733 (1935)

FEDERAL TRADE COMMISSION v. WALLACE.

No. 382.

Circuit Court of Appeals, Eighth Circuit.

February 9, 1935.

Martin A. Morrison, Asst. Chief Counsel, Federal Trade Commission, of Washington, D. C. (W. T. Kelley, Chief Counsel, Federal Trade Commission, of Washington, D. C., on the brief), for petitioner.

William R. Schneider, of St. Louis, Mo., for respondent.

Before STONE, GARDNER, and VAN VALKENBURGH, Circuit Judges.

VAN VALKENBURGH, Circuit Judge.

The complaint of the Federal Trade Commission was filed in January, 1924, and March 21, 1924, was the date fixed when a hearing would begin. The complaint was based upon section 5 of the Federal Trade Commission Act (15 USCA § 45). It was entitled, "In the Matter of Missouri State Retail Coal Merchants' Association, also Known as the Mid-West Retail Coal Association, its officers and Members," and nineteen of such officers and directors were named as respondents in both their individual and official capacities. In the complaint various acts constituting methods of unfair competition in commerce were charged. It is stated that the above-named association was composed of retail dealers in coal, having their respective places of business in the states of Missouri, Arkansas, and Illinois. It was incorporated under the laws of Missouri and its headquarters was in St. Louis in said state. Its constitution adopted the following definition of qualification for membership: "Any individual, firm or corporation regularly engaged in the business of selling coal, coke, or other fuel with facilities and stock sufficient to meet the reasonable demand of the public in his community."

Only retail dealers qualified under this definition were eligible to become, or be received as, members, and such were designated by respondents to the complaint as regular or legitimate dealers. All dealers or other persons, including individuals, firms, corporations, farm clubs, co-operative societies, church organizations, etc., who sell coal at retail, and who do not fulfill all the qualifications and requirements of said definition, are by these respondents denominated irregular or illegitimate dealers and are refused membership in said association.

All dealers contemplated, both regular and so-called irregular, located in the states aforesaid, purchase their coal from producers and wholesalers of coal, many of whom have their mines and places of business in states other than those in which the dealer-purchasers are located; and the coal so purchased is shipped by the producers and wholesalers from their respective locations through other states of the United States to the locations of the purchasers in said states of Missouri, Arkansas, and Illinois. It was charged that such respondent dealers had co-operated together to prevent so-called irregular dealers from obtaining coal from producers or wholesale dealers. This was accomplished by obtaining the names of such so-called irregular dealers doing business in the communities in which member dealers were located, and in publishing their names in a monthly trade journal of said association which circulates among association members and the producers and wholesalers who supply such members with coal. By articles and editorials in this trade journal and otherwise the association and its members sought to prevent producers and wholesalers from selling coal to so-called irregular dealers, threatening to boycott such producers and wholesalers unless they restricted their sales to association members, publishing and circulating comment derogatory to such so-called irregular dealers and to their credit, and applying to them denunciatory and abusive terms.

Inasmuch as the association members are large purchasers of coal at wholesale in their respective communities, it was charged that their threats and practices of boycott and intimidation had resulted in coercing and compelling many of such vendors of coal at wholesale to refuse to supply so-called irregular dealers with coal, with the result that competition in the distribution and sale of coal in said trade territory had been and then was unduly obstructed and hindered, and "consumers therein had been and are deprived of the advantages in price and otherwise which they would obtain from the natural flow of commerce in coal under conditions of free competition."

The foregoing statement of allegations, in some instances taken bodily from the complaint, is deemed sufficiently ample to disclose the nature of the charge brought by the Federal Trade Commission empowered and directed by the Federal Trade Commission Act "to prevent persons, partnerships, or corporations, except banks, and common carriers subject to the Acts to regulate commerce, from using unfair methods of competition in commerce." (15 USCA § 45.)

After an extended hearing, the commission, May 15, 1926, made detailed findings of fact in writing which fully supported and confirmed the charges laid in the complaint, and on the same day issued and caused to be served an order requiring the persons therein named to cease and desist from using such methods of competition. It was thereby ordered that the respondents named, their agents, representatives, and employees do "cease and desist from undertaking and cooperating together and acting in concert in hindering and preventing, or attempting to hinder and to prevent, directly or indirectly, the purchase and sale of coal in interstate commerce by and between producers, jobbers, and wholesale dealers therein, and individuals, firms, corporations, farm clubs, cooperative societies, church organizations or others, consumers of coal or dealers therein, by the following methods:

"1. Arbitrarily classifying sellers and purchasers of coal and shipments thereof as `Snowbird' shippers, `Snowbirds,' and `Snowbird' shipments, respectively, or by any similar or other terms because of or according to the extent or degree of equipment owned by the said purchasers or employed by them in the sale, movement, or distribution of coal, or causing any such classification to be published in any trade paper, or other publication, or to be communicated to others or among themselves, in that or any other manner.

"2. Designating or causing to be designated, in articles or editorials in any trade paper or other publication, or in any other manner, or by any other means, any individual, firm, corporation, or association, or groups thereof, as the vendor or purchaser of coal, or their shipments of coal by using or causing to be used denunciatory, scurrilous, abusive, or derogatory language of and concerning them or either of them.

"3. Soliciting or receiving between or among themselves or with others and/or circulating between and among themselves or with others communications or reports, either printed, written, or verbal, having the purpose, tendency or the effect of inducing, coercing, or compelling producers, jobbers, or wholesale dealers in coal, their agents or their brokers, directly or indirectly, to refuse to deal with or to sell coal to any person, firm, corporation, or association.

"4. Threatening with loss of patronage or custom, any producer, jobber, or wholesale dealer in coal, or his agent or broker, for selling or agreeing to sell to any person, firm, corporation, or association, or from persuading any such producer, jobber, or wholesale dealer in coal not to sell coal to any person, firm, corporation, or association."

The commission has applied to this court for the enforcement of this order.

In their answers filed to the complaint the respondents, with the exception of E. J. Wallace, in general disclaimed any personal participation in the activities of the Mid-West Retail Coal Association, but stated that the affairs of the organization were under the guidance of Mr. Wallace, their commissioner, who was given unlimited authority to use his own judgment in all matters. In view of the intimation in the answer and application of respondent Wallace to set aside and have denied the commission's application for the enforcement of its cease and desist order, that the Mid-West Retail Coal Association has been dissolved, and that its activities and those of its directors have ceased, the order of enforcement is now asked against Wallace as sole respondent in this proceeding.

In his said answer respondent Wallace does not deny that the findings are supported by substantial evidence, nor the allegation in the commission's petition that he has failed and neglected to obey the cease and desist order. He seeks rather to justify the activities charged and found, and to challenge the sufficiency of the findings to support the cease and desist order. The specifications of his challenge are in substance the following:

1. That the activities of the respondent and his corespondents, prior to the filing of the complaint by the commission, were directed solely toward the protection of the coal consuming public and the established legitimate coal dealers.

2. That the activities of the respondent and his corespondents are in accord with the coal code established under the National Industrial Recovery Act; and that the present proceeding is in conflict therewith.

3. Respondent is not, and has not been, doing unlawful acts nor threatening so to do.

4. The respondent cannot alone "co-operate and act in concert" in violation of the language of the cease and desist order.

It will be seen that this answer of the respondent Wallace does not traverse the findings of the commission. It amounts rather to a demurrer to those findings, their sufficiency to support the conclusion reached, and the propriety and effectiveness of the cease and desist order as a result of such findings and conclusion. In such case, we have no occasion to review the evidence, and the findings must be...