Frankfort Distilleries v. United States

• Decision Date: 13 November 1944
• Docket Number: 2807,2808.,No. 2792-2799,2792-2799
• Citation: 144 F.2d 824
• Parties: FRANKFORT DISTILLERIES, Inc., v. UNITED STATES, and nine other cases.
• Court: U.S. Court of Appeals — Tenth Circuit

144 F.2d 824 (1944)

FRANKFORT DISTILLERIES, Inc., v.UNITED STATES, and nine other cases.

Nos. 2792-2799, 2807, 2808.

Circuit Court of Appeals, Tenth Circuit.

August 26, 1944.

Writ of Certiorari Granted^* November 13, 1944.

COPYRIGHT MATERIAL OMITTED

W. W. Grant, of Denver, Colo. (Morrison Shafroth and Henry W. Toll, both of Denver, Colo., on the brief), for appellantsFrankfort Distilleries, Inc., Seagram-Distillers Corporation, McKesson & Robbins, Inc., and J. E. Speegle.

Morris Rifkin, of Denver, Colo., on the brief, for appellantJ. E. Speegle.

William V. Hodges, of Denver, Colo., (Hodges, Vidal & Goree, of Denver, Colo., on the brief), for appellantNational Distillers Products Corporation.

D. L. Street, of Louisville, Ky., and Peter Holme, and Robert E. More, both of Denver, Colo., on the brief for appellantBrown Forman Distillers Corporation.

Charles Rosenbaum, of Denver, Colo. (A. H. Stuart, of Detroit, Mich., Newell W. Ellison, of Washington, D. C., Richard S. Goldman, of San Francisco, Cal., and Edward Miller, of Denver, Colo., on the brief), for appellantHiram Walker, Inc.

Robert S. Marx, of Detroit, Mich. (Ralph T. Heymsfeld, of New York City, George R. Beneman, of Washington, D. C., Ira C. Rothgerber and Rothgerber & Appel, all of Denver, Colo., and Nichols, Wood, Marx & Ginter, of Cincinnati, Ohio, on the brief), for appellantSchenley Distillers Corporation.

George B. Haddock, Sp. Asst. to Atty. Gen. (Don W. Marshall, Sp. Atty., of Denver,.Colo., Wendell Berge, Asst. Atty. Gen. and Thomas J. Morrissey, U. S. Atty., of Denver, Colo., on the brief), for the United States in Nos. 2792 to 2799.

Gail L. Ireland, Atty. Gen., H. Lawrence Hinkley, Deputy Atty. Gen., Duke W. Dunbar, 1st Asst. Atty. Gen., and George K. Thomas, Asst. Atty. Gen., on the brief of amicus curiae in Nos. 2792 to 2799.

Holmes Baldridge, Sp. Asst. to Atty. Gen. (Wendell Berge, Asst. Atty. Gen., George H. West, U. S. Atty., of Topeka, Kan., and Horace L. Flurry and Earl A. Jinkinson, Sp. Assts. to Atty. Gen., on the brief), for the United States in Nos. 2807and2808.

Henry N. Ess, of Kansas City, Mo. (Mitchell T. Neff, of San Francisco, Cal., and Louis R. Gates, of Kansas City, Kan., on the brief), for appelleesSafeway Stores, Inc.(Maryland), et al.

Robert S. Marx, of Detroit, Mich., and Thomas M. Lillard, of Topeka, Kan. (Frank E. Wood and Nichols, Wood, Marx & Ginter, all of Cincinnati, Ohio, and Lillard, Eidson, Lewis & Porter, of Topeka, Kan., on the brief), for appelleesKroger Grocery & Baking Company et al.

Before PHILLIPS, BRATTON, HUXMAN, and MURRAH, Circuit Judges.

Writ of Certiorari Granted, in all cases except Nos. 2807and2808, November 13, 1944.See65 S.Ct. 132, 133.

BRATTON, Circuit Judge.

These are three criminal prosecutions for combining and conspiring, in some counts to restrain interstate trade and commerce, and in others to monopolize such trade and commerce, in violation of the Sherman Act, as amended, 26 Stat. 209,50 Stat. 693,15 U.S.C.A. §§ 1,2.The cases were submitted on rehearing to the full court.The opinions previously announced, for the unanimous court in one instance and for the majority in the other, are withdrawn and the following is substituted in lieu of them.

The indictment in Numbers 2792 to 2799, inclusive, containing two counts, was returned in the United States Court for Colorado against twenty-nine corporations and fifty-four individuals.Nineteen of the corporations are engaged in the production of alcoholic beverages outside of Colorado; eight are wholesalers engaged in the business in Colorado of purchasing alcoholic beverages for resale to retailers; one is a wholesale association, the members of which are wholesalers doing business in the state, hereinafter referred to as Wholesale Association; and one is a retail association, the members of which are retailers engaged in business in the state, hereinafter called Package Association.Some of the individuals are or were officers or employees of the defendant producers; some are or were officers or employees of the defendant wholesalers; and some are engaged in the sale and distribution at retail of alcoholic beverages in Colorado.The first count was dismissed.

The second count charges a conspiracy to raise, fix, and maintain the retail prices of alcoholic beverages shipped into Colorado.It defines certain terms and delineates the facts with respect to the several defendants as to being producer, wholesaler, retailer, officer, or employee, respectively.It contains a description of the nature of the trade and commerce involved.Under this head, it sets out that alcoholic beverages are marketed in Colorado by means of a continuous flow of shipments from producers located outside the state through wholesalers and retailers to the consuming public; that beverages shipped and sold in bottles by producers can be sold to retailers there only by wholesalers licensed under the laws of that state; that wholesalers and retailers are conduits through which beverages are shipped into the state and sold and distributed to the consuming public; that more than ninety-eight per cent of the spirituous liquor, more than eighty per cent of the wine, and substantial amounts of beer, consumed in Colorado are produced elsewhere and shipped into the state for sale and distribution; that alcoholic beverages are distributed to more than 700 retailers in the state by approximately twenty-eight wholesalers; that more than seventy-five per cent of the spirituous liquor and wine, and substantial quantities of beer, are sold and distributed by the defendant wholesalers; and that all of the liquor and wine, and substantial quantities of beer, sold and distributed by the bottle or case to the consuming public, are sold by retailers, including the defendant retailers and other members of the defendantPackage Association.It is then charged that beginning about January, 1936, and continuing to the time of the presentation of the indictment, the defendants combined and conspired to raise, fix, and maintain the retail prices of alcoholic beverages shipped into Colorado from producers located outside the state, by raising, fixing, and stabilizing retail mark-ups and margins of profit; that it was a part of the combination and conspiracy that the defendants from time to time discuss, agree upon, and adopt high, arbitrary, and non-competitive retail prices, mark-ups, and margins of profit; that the defendantsWholesale Association and Package Association, wholesalers, and retailers agree upon and undertake to persuade, induce, and compel producers, including the defendant producers, and wholesalers, to enter into fair trade contracts affecting every type and brand of alcoholic beverage shipped into Colorado and to establish in and by such contracts high, arbitrary, and artificial, retail prices embodying the high, arbitrary, and non-competitive margins of profit agreed upon; that the defendantPackage Association prepare and adopt forms of fair trade contracts acceptable to the defendant retailers and to the other members of the association; that the defendantPackage Association agree with producers and wholesalers on the forms of fair trade contracts to be used by such producers and wholesalers, and prepare and circulate among its members bulletins and notices announcing the adoption of fair trade contracts and giving the names of producers and wholesalers entering into them and also the names of those not doing so; that the defendant retailers, through the defendantPackage Association, agree to and do patronize only those producers and wholesalers who enter into fair trade contracts embodying such retail prices, mark-ups, and margins of profit, and who require and compel observance of the minimum retail prices established in that manner, agree to and do withhold their patronage from producers and wholesalers who fail or refuse to enter into such fair trade contracts, and agree from time to time with producers and wholesalers respecting revisions in the retail prices established in and by such fair trade contracts so as to preserve and maintain the retail mark-ups and margins of profit.It is further charged that the defendants, acting in part through the defendantsWholesale Association and Package Association agree to and do police the high, arbitrary, and non-competitive retail prices, mark-ups, and margins of profit, and require and secure observance of them; that they agree to and do employ paid executives and investigators to spy upon and embarrass retailers who fail or refuse to observe such retail prices, mark-ups and margins of profit, and threaten to and do institute and cause to be instituted legal proceedings against such retailers who fail or refuse to observe such prices, mark-ups, and margins of profit.It is also charged that the defendant retailers agree among themselves and with the defendant producers and the defendant wholesalers that retailers selling at prices lower than those established in the fair trade contracts be deprived of the opportunity to purchase beverages from the defendant producers and the defendant wholesalers; that the defendant retailers threaten to and do boycott producers and wholesalers who supply their products to retailers failing or refusing to observe the retail prices, mark-ups, and margins of profit; that in order to reduce price competition among retailers, defendant retailers, acting in part through defendantPackage Association, agree and attempt to persuade and induce the authorized officials of Colorado, and of the City and County of Denver, to reject applications for retail liquor licenses; and that for the purpose of financing such activities, defendants agree upon and provide for the collection of an extra charge added to the wholesale price, the proceeds to be paid to the Wholesale Association and that it then pay a portion of such proceeds to the Package Association.And it is...