International Harvester Co. of America v. Commonwealth

• Decision Date: 21 June 1911
• Citation: 144 Ky. 403,138 S.W. 248
• Parties: INTERNATIONAL HARVESTER CO. OF AMERICA v. COMMONWEALTH.
• Court: Kentucky Court of Appeals

138 S.W. 248

144 Ky. 403

INTERNATIONAL HARVESTER CO. OF AMERICA v. COMMONWEALTH.

Court of Appeals of Kentucky.

June 21, 1911

Appeal from Circuit Court, Logan County.

The International Harvester Company of America was convicted of violation of the anti-trust laws, and appeals. Reversed, with directions for new trial. by other and parol evidence.

Browder & Browder and Arthur M. Rutledge, for appellant.

James Breathitt, Atty. Gen., and Tom B. McGregor, Asst. Atty. Gen for the Commonwealth.

CARROLL J.

This is a prosecution under the anti-trust laws of the state, and is the second appeal of the case. In the opinion on the former appeal, which may be found in 137 Ky. 668, 126 S.W. 352, it is said: "The gist of the offense denounced by our statutes against pooling is that the purpose of the pool is to enhance the value of the article pooled above its real value. Where the design of the poolers is to so enhance the value of their product, or where, whatever their design, such is the natural effect of their action, and such as was necessarily foreseen because of its obviousness, the offense is completed. A party is presumed to have intended a result which is the logical and usual outcome of his willful act. *** When, therefore, the prosecution shows (1) that there has been a combination among all or any of the producers of a commodity of merchandise, by which its output is restricted or controlled alone by the confederates in the scheme; (2) that the market price of the article was then materially enhanced; (3) that the conditions affecting commerce in general are normal; (4) that the competition otherwise than for the combination complained of would be fair--there would be established prima facie a case of violation of the statute." On the trial from which this appeal was prosecuted, the jury found the appellant guilty and assessed the punishment at a fine of $500.

In the argument presenting the reasons why the judgment should be reversed, the chief contentions of counsel for appellant are that (1) there was no evidence that the appellant formed or entered into a combination, or that it became a party to such combination if one was formed or entered into, for the purpose of fixing, regulating, or controlling prices or limiting the production or manufacture of harvesting machinery; (2) that there was no evidence that the combination formed or entered into, if such was the case, was organized or created for the purpose of, or that it had the effect of, or did as a matter of fact enhance the price of the agricultural machinery manufactured or sold by the combination above its real value; (3) that there was no evidence that a combination was entered into within one year next before the finding of the indictment, or that a combination was entered into in Logan county, or that appellant sold any machines within the year next preceding the indictment in Logan county in pursuance of or as a party to a combination.

Upon the trial the commonwealth introduced several witnesses among them W. M. Gill, who testified that from 1898 to 1902 he represented as salesman and in other capacities the Deering Machine Company, a concern that manufactured and sold mowers, reapers, binders, and repairs therefor; and that during this time there was active competition between the Deering Machine Company and the McCormick, the Plano, the Champion, the Osborne, and the Walter A. Wood machine companies, all of which companies were engaged in the same business; that each of these companies during this time had its own salesmen, agents and employés, and each company conducted its business entirely independent of the others; that each company sold its machines and repairs at prices fixed by itself, and that differed from that at which other machines and repairs were sold; that in the fall of 1902 the International Harvester Company of America was formed or organized; that he learned this from information given him that the Deering Machine Company for which he worked, and the other companies mentioned, had been merged into what is known as the International Harvester Company of America. He further testified that he worked for and represented the International Company after it was organized for about two years in the same capacity that he had previously represented the Deering Machine Company; that the business of the International Company was divided into divisions, each division being designated by the name of one of the machine companies--for example, the division that sold Deering machines was known as the Deering division; that after these companies were merged into the International Company there was no competition between the machine companies that became a part of the International Company, nor was there any competition between the agents or employés representing the various divisions of the parent company, and all the machines controlled by it were sold at the same price. He further said that the agents of the International Company had charge of the business involved in the sale of machines manufactured by all the companies; that all agents were employed by, reported to, and represented the International Company, no matter which one of the machines mentioned they sold or looked after.

R. D. Traugher testified that during the years mentioned he was engaged in business in Logan county, and for several years prior to 1902 he sold Champion machines, and at one time the Deering, and at another the Osborne, buying these machines from the respective companies that manufactured them; that in 1907 and 1908 he sold Champion machines that he bought in those years from the International Company; and that the price at which it sold these machines was about 5 per cent. more than the price at which they were sold by the individual company before the combination was formed. He further said that in 1908 he handled the Osborne, Champion, and Deering machines under a contract with the International Company, and that these machines were bought by him and sold at the same price.

Oscar Hutcherson testified that he was engaged in 1908 in business in Logan county, and bought from the International Company Deering machines. Other witnesses testified to substantially the same state of facts. On cross-examination the witnesses introduced for the commonwealth, or some of them, were asked, and said, that the price of iron, steel, wood and labor advanced greatly more than five per cent. during the years that the International Company advanced the price of the machines sold by it 5 per cent.

No witness was introduced in behalf of the appellant company. Without relating further the facts, we may say that upon the whole the evidence introduced in behalf of the commonwealth conduced to show: (1) That for several years prior to 1902 the Deering, McCormick, Plano, Champion, and other harvesting machine companies sold in competition in Logan county, Kentucky, mowers, reapers, and binding machines manufactured by each of these respective concerns, and that each establishment, independent of the others, had its agents in the field looking after the business of selling and setting up the machines sold by it, and collecting the purchase price. (2) That in 1903 and thereafter, all the machines and fixtures theretofore made by these several companies were sold by the International Company, and there was no competition between these respective companies or any local or other agents representing them. (3) That one agent representing the International Company took the place of the several agents who had represented the other companies. (4) That this condition of affairs that had continued from 1903 existed when the indictment was returned. (5) That in 1906 or 1907 the price of machines was advanced by the International Company 5 per cent. above the price they were sold at when the sales were controlled by the companies that manufactured them, and that an advance of 20 per cent. was made on some parts of the machinery. (6) That the expense of the International Company for selling machines and collecting money was less than it was when they were sold in competition, as under the old arrangement each company had its own agents or representatives, while under the new one agent or representative acted for all of them. (7) That within one year before the finding of the indictment, machines were sold by the International Company in Logan county, Ky.

We think this evidence was abundantly sufficient to show that a combination was entered into between these several companies, and that the purpose of it was to fix, regulate, and control the price of the machines made by them, and that the International Company was a party to this combination, and that under its name the several companies sold their product.

It is not necessary to sustain a conviction in cases like this that there should be positive evidence that a combination or conspiracy was formed and that the purpose of it was to fix regulate or control prices. A rule of evidence like this would in almost every case operate to defeat the execution of the law, as it would be difficult, if not impossible, in many cases to introduce witnesses who could testify of their own knowledge that such a combination was formed and that its purpose was to fix or control prices. It will be sufficient to show, as was done in this case, that two or more separate and independent concerns were selling the same line of...