International Harvester Company of America v. State of Missouri, On the Information of Its Attorney General

Decision Date08 June 1914
Docket NumberNo. 166,166
Citation234 U.S. 199,58 L.Ed. 1276,34 S.Ct. 859
PartiesINTERNATIONAL HARVESTER COMPANY OF AMERICA, Plff. in Err., v. STATE OF MISSOURI, ON THE INFORMATION OF ITS ATTORNEY GENERAL
CourtU.S. Supreme Court

Messrs. Edgar A. Banceroft, William M. Williams, Selden P. Spencer, and Victor A. Remy for plaintiff in error.

[Argument of Counsel from pages 200-202 intentionally omitted] Mr. John T. Barker, Attorney General of Missouri, and Messrs. W. T. Rutherford, Thomas J. Higgs, W. M. Fitch, and Paul P. Prosser for defendant in error.

Mr. Justice McKenna delivered the opinion of the court:

Information in the nature of quo warranto, brought in the supreme court of the state, to exclude plaintiff in error from the corporate rights, privileges, and franchises exer- cised or enjoyed by it under the laws of the state, that they be forfeited, and all or such portion of its property as the court may deem proper be confiscated, or, in lieu thereof, a fine be imposed upon it in 'punishment of the perversion, usurpation, abuse, and misuse of franchises.'

The ground of the action is the alleged violation of the statutes of the state passed respectively in 1899 and 1909, and entitled 'Pools, Trusts, and Conspiracies,' and 'Pools, Trusts, and Conspiracies and Discriminations.'

The facts alleged in the information are these: Plaintiff in error is a Wisconsin corporation engaged in the manufacture and sale of agricultural implements, binders, mowers, etc., and was licensed on the 5th of April, 1892, to do business in Missouri under the name of the Milwaukee Harvester Company, and on September 18, 1902, became licensed to do and engaged in such business in the state. In that year in such business in the state. In that year New Jersey was organized with a capital stock of $120,000,000 for the purpose of effecting a combination of plaintiff in error and certain other companies to restrain competition in the manufacture and sale of such agricultural implements in Missouri, and the New Jersey company has maintained plaintiff in error as its sole selling agent in Missouri. Before the combination the companies combined were competitors of one another and of other corporations, individuals, and partnerships engaged in the same business in the state, and that thereby the people of the state, and particularly the retail dealers and farmers of the state, received the benefit of competition in the purchase and sale of farm implements. The combination was designed and made with a view to lessen, and it tended to lessen, free competition in such implements, and thereby the said corporations entered into and became members of a pool, trust, combination, and agreement. In furtherance thereof, and for the purpose of giving the International Harvester Company of New Jersey a monopoly of the business of manufacturing and selling agricultural implements in the state, and for the purpose of preventing competition in the sale thereof, plaintiff in error has compelled the retail dealers in each county of the state who desire to handle and sell or act as agent for it to refrain from selling implements manufactured or sold by competing companies or persons. By reason thereof competition in such implements has been restrained, prices controlled, the quantity of such implements has been fixed and limited, and plaintiff in error has been able to secure, and for several years enjoy, from 85 per cent to 90 per cent of the business, all to the great damage and loss of the people of the state, and by reason of its participation in the pool, trust, and combination, and by reason of the acts and things done by it, plaintiff in error has been guilty of an illegal, wilful, and malicious perversion and abuse of its franchises, privileges, and licenses granted to it by the state.

The answer of plaintiff in error denied that it had become a party to any combination, or that, in its transactions, there was any purpose to restrain or lessen competition, or that trade had been or was restrained.

The case was referred to a special commissioner to take the evidence and report his conclusions. He found, as alleged in the information, that the International Harvester Company of New Jersey was a combination of the properties and businesses of formerly competing harvester companies, and plaintiff in error being one of such companies, and thereafter, by selling the New Jersey company's products in Missouri, had violated the Missouri statutes against pools, trusts, and conspiracies.

In exceptions to the report of the special commissioner plaintiff in error urged that the statute of Missouri violated the equality clause and due process clause of the 14th Amendment to the Constitution of the United States, '(1) because said statute arbitrarily discrim- inates between persons making or selling products and commodities and persons selling labor and service of all kinds: In that each section of said statute applies only to articles of merchandise, and not to labor or services and the like, the prices of which are equally and similarly determined by competition, and may be equally and similarly the subject of combination and conspiracy to the detriment of the public. (2) Because said statute arbitrarily discriminates between the makers and sellers of products and commodities and the purchasers thereof: It prohibits manufacturers and sellers from making contracts or arrangements intended or tending to increase the market price of the articles they make or sell, but does not prohibit purchasers from combining to fix or reduce the market price of the commodities or articles to be purchased by them. (3) Because said statute, as construed by the commissioner, unreasonably and arbitrarily interferes with plaintiff in error's right to make proper and reasonable business contracts, and deprives it of property rights in respect thereto.'

These exceptions were urged and argued in the supreme court upon the filing of the commissioner's report. Judgment was entered upon the report, in which it was adjudged that by reason of the violation of the statutes of the state, as charged in the information, plaintiff in error had forfeited the license theretofore granted to it to do business in the state, and it was adjudged that the license be forfeited and canceled and the company ousted from its rights and franchises granted by the state to do business in the state, and a fine of $50,000 was imposed upon it. It was, however, provided that upon payment of the fine on or before the 1st of January, 1912, and immediately ceasing all connection with the International Harvester Company of New Jersey and the corporations and copartnerships with which it had combined, and not continuing and maintaining the unlawful agreement and com- bination with them to lessen and destroy competition in the sale of the enumerated farm implements, and giving satisfactory evidence thereof to the court, the judgment of ouster should be suspended. The company was given until March 1, 1912, 'to file its proof of willingness' to comply with the judgment. It was also adjudged that upon a subsequent violation of the statute 'the suspension of the writ of ouster shall be removed' by the court 'and absolute ouster be enforced,' and to that end the court retained 'its full and complete jurisdiction over the cause.' 237 Mo. 369, 141 S. W. 672.

A motion is made to dismiss on the ground that plaintiff in error in its answer simply denied that it had violated the antitrust laws of the state, and it is contended that by not alleging in its answer that those laws violated the Constitution of the United States, it waived such defense. It is further contended that because the Federal right was not asserted in the answer, the supreme court of the state could not have considered, and did not consider or decide it. Decisions of the supreme court of Missouri are cited to sustain the contentions. The decisions declare the proposition that constitutional questions must be raised at the first opportunity, or, as it is expressed in one of the cases (Brown v. Missouri, K. & T. R. Co. 175 Mo. 185, 74 S. W. 973), 'the protection of the Constitution must be timely and properly invoked in the trial court.'

In Dahnke-Walker Mill. Co. v. Blake, 242 Mo. 31, 145 S. W. 438, it is said: 'The rule of this court is that so grave a question [constitutional question] must be lodged at the first opportunity, or it will be deemed to have been waived. If it can be appropriately and naturally raised in the pleadings, and thereby be a question lodged in the record proper, such is the time and place to raise it;' and that it is too late to raise the question after judgment in a motion for new trial. In Hartzler v. Metropolitan Street R. Co. 218 Mo. 562, 117 S. W. 1124, it was held: 'The motion for a new trial was not the first door for the question to enter, and in our later decisions we have ruled that a question of such gravity must be raised as soon as orderly procedure will allow. This in order that the trial court may be treated fairly, and the question get into the case under correct safeguards, and earmarked as of substance, and not mere color.'

It is manifest, we think, that the court only intended to express the condition of appellate review to be that in the trial court constitutional questions should not be reserved until the case had gone to judgment on other issues, and then used to secure a new trial. The principle of the rulings is satisfied in the case at bar. It is, as we have seen, an original proceeding in the supreme court, and upon the report of the commissioner which brought the case to the court for decision of the issues and questions involved in it the Federal questions were made 'under correct safeguards and earmarked as of substance, and not mere color.' It is true the court has not referred to them in its opinion, but we cannot regard its silence as a condemnation of the time or manner at or in which they were...

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