Indiana Farmer Guide Pub Co v. Prairie Farmer Pub Co

• Citation: 55 S.Ct. 182,293 U.S. 268,79 L.Ed. 356
• Decision Date: 03 December 1934
• Docket Number: No. 60,60
• Parties: INDIANA FARMER'S GUIDE PUB. CO. v. PRAIRIE FARMER PUB. CO. et al. *
• Court: U.S. Supreme Court

293 U.S. 268

55 S.Ct. 182

79 L.Ed. 356

INDIANA FARMER'S GUIDE PUB. CO.

v PRAIRIE FARMER PUB. CO. et al.^*

No. 60.

Argued Nov. 8, 1934.

Decided Dec. 3, 1934.

Messrs. Eben Lesh, of Huntington, Ind., and U.S. Lesh, and James E. Lesh, both of Indianapolis, Ind., and Joseph Lesh, of Huntington, Ind., for petitioner.

[Argument of Counsel from pages 269-270 intentionally omitted] Messrs. Maxwell V. Beghtol, of Lincoln, Neb., Thomas E. Murphy, of Chicago, Ill., and Burke G. Slaymaker and Clarence F. Merrell, both of Indianapolis, Ind., for respondents.

[Argument of Counsel from pages 270-271 intentionally omitted] Mr. Justice BUTLER delivered the opinion of the Court.

Petitioner brought this action against respondents alleging facts upon which it claimed they violated sections 1 and 2 of the Sherman Anti-Trust Act (15 USCA §§ 1, 2) and thereby caused injury to its property and business for which it prayed recovery of threefold damages under section 7 of the act (15 USCA § 15 note). The respondents answered separately by general denial. At the close of all the evidence they submitted a written motion that the court direct a verdict in their favor. The court granted the motion and entered judgment. The Circuit Court of Appeals affirmed. 70 F.(2d) 3.

Section 1 of the Sherman Act denounces 'every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States.' 15 U.S.C. § 1 (15 USCA § 1). Section 2 declares: 'Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States * * * shall be deemed guilty of a misdemeanor.' 15 U.S.C. § 2 (15 USCA § 2). Section 7 provides: 'Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act, may sue therefor * * * and shall recover three fold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee.' 26 Stat. 210 (15 USCA § 15 note).

For a number of years, 1928 to 1932 inclusive, next prior to the commencement of this action, the petitioner and each respondent other than the Midwest Farm Paper Unit, Inc., was a publisher of one or more farm papers. Each is a general, and not a vocational, paper; the larger part of its circulation is in the State where printed; it does not circulate in any substantial number throughout the country as a whole and is called a state or sectional paper in order to distinguish it from publications having a wider and what is referred to as a national circulation. Petitioner publishes weekly 'The Indiana Farmer's Guide' at Huntington, Ind. Its circulation is about 160,000, of which over two-thirds is in Indiana and approximately 50,000 in other States. The respondent Prairie Company publishes in Illinois 'The Prairie Farmer' and the 'Indiana Edition' of the same, which has a large circulation in Indiana. The Wallace Company publishes in Iowa 'Wallace's Farmer and Iowa Homestead.' The Wisconsin Company publishes in Wisconsin the 'Wisconsin Agriculturist and Farmer.' The McKelvie Company publishes in Nebraska 'The Nebraska Farmer.' The Webb Company publishes in Minnesota 'The Farmer and Farm, Stock and Home' and the 'Dakota Edition' of the same. Advertising matter carried by each of these publishers includes classified and display or commercial advertisements. The latter only is involved in this case. Each is largely dependent for financial success upon revenue derived from these advertisements. Most of the advertisers are located in States other than those in which the papers are published. About ninety per cent. of petitioner's advertisements comes from points outside Indiana and is obtained by correspondence, traveling solicitors, and representatives located in different parts of the country. Advertisers, in order to enable petitioner to print their advertisements as desired, send to it from outside Indiana electrotypes which, after being used, are returned to the advertiser or held subject to his order.

The Midwest Unit is an agency incorporated in 1931 and the successor of an organization formed in 1928. Its officers and directors are representatives of the other respondents which make use of that agency, as similarly use was made of its predecessor, to procure at combination rates identical advertisements to be published in their seven farm papers. The gist of the complaint is that respondents entered into a contract, combination, and conspiracy for the purpose of obtaining a monopoly of the farm paper business including the publication, circulation, and distribution of advertisements of peculiar interest to farmers 'within the territory covered' by their publications; that in furtherance of this contract, combination and conspiracy they conceived a plan and design calculated to break down and destroy 'competition with other farm publications within said territory'; and that in order to effectuate that purpose they agreed upon a combination schedule of advertising rates for all their publications materially below the total of the separate rates of each.

There was evidence tending to show: That the combination rate for advertisements in respondents' seven papers was much less than the total of the separate charges for the same advertisements in any six; that respondents acting separately and in concert sought and obtained ad- vertisements for all seven papers at rates much less than the charges would have been for identical advertisements, if omitting the 'Indiana Edition' of 'The Prairie Farmer,' they were published in the other six and in petitioner's 'Indiana Farmer's Guide.' Thus, at least according to petitioner's contention, it appears that by means of the combination rate, respondents, acting together pursuant to agreement to that end, gave a substantial financial advantage to advertisers choosing the 'Indiana Edition' instead of the 'Farmer's Guide.'

Petitioner contends that the ground upon which the district court directed the verdict was that its activities were not shown by the evidence to constitute interstate commerce. The record is ambiguous. Respondents' motion did not specify any grounds upon which they claimed to be entitled to the peremptory instruction. There is nothing to indicate the arguments submitted or authorities cited by either party. The court orally instructed the jury: 'There has been, in my opinion, a failure on the part of the plaintiff in this case to show that there has been any restraint of trade as between the different states * * *. That being true, this court would not have jurisdiction to entertain the case, at all, and your finding, under that state of facts, should be for the defendants.'

Respondents take no issue with the petitioner's assertion of fact. But, impliedly assuming its correctness, they argue that, while petitioner and respondents are engaged in interstate commerce in the circulation of their papers, the subject-matter of the suit is not that business but the making of contracts by respondents for the insertion of advertising matter in their papers and that therefore the case is ruled by Blumenstock Bros. Advertising Agency v. Curtis Pub. Co., 252 U.S. 436, 438, 40 S.Ct. 385, 64 L.Ed. 649. And they say the trial court did not err in holding that 'there can be no restraint or monopoly of interstate commerce when the subject matter of the complaint does not relate to interstate commerce at all.' Thus, by a construction of the complaint that is utterly untenable, they support the very basis upon which petitioner maintains the district court rested its decision. Inferentially their contentions go far to show—and in the light of all the circumstances we find—that the trial court's direction of verdict and its judgment rests solely upon the ground that petitioner failed to introduce evidence that its business or that of respondents included interstate commerce.

Blumenstock Bros. Advertising Agency v. Curtis Pub. Co., supra, gives no support to that ruling. There, an advertising agency sued a publishing company under section 7 of the Sherman Act for damages alleged to have been caused to the agency by the publisher's violation of section 2. Defendant moved to dismiss on the ground that the complaint did not allege a cause of action within the provisions of the act. The district court granted the motion and entered judgment dismissing the suit for want of jurisdiction over the defendant or the action, and included in the record a certificate in accordance with section 238 of the Act of March 3, 1911, 36 Stat. 1157, that the question involved was whether the facts alleged constituted a cause of action under the act.

We said (page 442 of 252 U.S., 40 S.Ct. 385, 387): 'In the present case * * * the subject-matter dealt with was the making of contracts for the insertion of advertising matter in certain periodicals belonging to the defendant. It may be conceded that the circulation and distribution of such publications throughout the country would amount to interstate commerce, but the circulation of these periodicals did not depend upon or have any direct relation to the advertising contracts which the plaintiff offered and the defendant refused to receive except upon the term stated in the declaration. The advertising contracts did not involve any movement of goods or merchandise in interstate commerce, or any transmission of intelligence in such commerce. This case is wholly unlike International Text-Book Co. v. Pigg, 217 U.S. 91, 30 S.Ct. 481, 54 L.Ed. 678, 27 L.R.A.(N.S.) 493, 18 Ann.Cas. 1103, wherein there was a continuous interstate traffic in text-books and apparatus for a course of study pursued by means of correspondence, and the movements in interstate commerce were held to bring the subject-matter within the domain of federal control, and to exempt it...