Gottschalk Co. v. Distilling & Cattle-Feeding Co.

• Decision Date: 24 April 1894
• Court: United States Circuit Court, District of Illinois
• Parties: GOTTSCHALK CO. v. DISTILLING & CATTLE-FEEDING CO.

62 F. 901

GOTTSCHALK CO. v. DISTILLING & CATTLE-FEEDING CO.

United States Circuit Court, D. Illinois.

April 24, 1894

H. B Stevens, for plaintiff.

Green &amp Robbins, for defendant.

GROSSCUP District Judge (orally).

The action in this case is to recover from the Distilling &amp Cattle-Feeding Company something over $35,000, said to be the money of the plaintiff, and unlawfully and wrongfully withheld from the plaintiff by the defendant. The testimony shows that the method of doing business of the defendant was something like this: It would appoint wholesale liquor dealers throughout the country as its ostensible agents. It would then sell to these supposed agents the products of the defendant at a price seven cents per proof gallon above the prevailing market price. This seven cents thus taken from the liquor dealers would be held in the treasury of the defendant until the expiration of six months. If it then appeared that the liquor dealer had not made purchases from any other source than from the defendant, there would be refunded to him two cents per proof gallon of the money remaining in the hands of the defendant. The liquor dealer, in turn, selling to his customers, would issue to them vouchers, and at the expiration of six months each customer could present this voucher to the distilling company, and, if accompanied by proof that the customer, whether he be a wholesale or retain dealer, had not purchased any goods except from the so-called agents of the distilling company, such customer would be entitled to receive five cents per proof gallon from the distilling company. The scheme is a very ingenious one, and was gotten up for the purpose of compelling the liquor trade to buy all its product from the Distilling & Cattle-Feeding Company.

One of the questions presented on the trial of the case was whether the method was legal. The argument was made that it was a simple rebate, such as railroads and other corporations had been in the habit of taking, and such as had been sanctioned by the courts. I do not regard it as a simple rebate. If the defendant had sold its product to the trade at the market price of such product through the country, and had then agreed with one of its consumers to discount or rebate from that market price a certain percentage on account of continued patronage, or for any other reason, such would be distinctly a rebate; but the defendant in this case exacted seven cents above the market price, and only agreed to return this amount thus exacted by it beyond the market price of the product on condition that the customer continue to buy all of his product from the defendant. It is not so much a rebate as a hostage that the customer will not go into any other market to purchase the product. Whether that is a restraint on trade which the law, in deference to public policy, will permit, it is not necessary, in this case, to pass upon. I have very great...