J. R. Watkins Medical Co. v. Johnson

• Decision Date: 26 November 1913
• Citation: 162 S.W. 394
• Parties: J. R. WATKINS MEDICAL CO. v. JOHNSON et al.
• Court: Texas Court of Appeals

162 S.W. 394

J. R. WATKINS MEDICAL CO. v. JOHNSON et al.

Court of Civil Appeals of Texas. San Antonio.

November 26, 1913.

Rehearing Denied January 7, 1914.

Appeal from District Court, De Witt County; John M. Green, Judge.

Action by the J. R. Watkins Medical Company against W. E. Johnson and others. From a judgment dismissing the action, plaintiff appeals. Affirmed.

Sam C. Lackey, of Cuero, and Tawney, Smith & Tawney, of Winona, Minn., and McFarland & Lewright, of San Antonio, for appellant. Davidson & Bailey and R. J. Waldeck, all of Cuero, for appellees.

TALIAFERRO, J.

This suit was brought by the J. R. Watkins Medical Company, a private corporation, in the district court of De Witt county, Tex., against W. E. Johnson, as principal debtor, and William Thomas, Chas. G. Breeden, J. K. Irwin, and William Lienhard, as sureties, for a balance due and owing for medicines, extracts, etc., furnished by plaintiff to defendant Johnson on a written contract between plaintiff and all of the defendants, by the terms of which said Thomas, Breeden, Irwin, and Lienhard agreed to guarantee payment to plaintiff for said goods. Defendants Thomas, Breeden, Irwin, and Lienhard filed a general demurrer and special exceptions, by which they insist that said contract is illegal and unenforceable because violative of the anti-trust laws of Texas. These demurrers were sustained, and the plaintiff refused to amend its petition, whereupon the cause was dismissed by the court.

By the contract, stripped of its verbiage, appellant agreed to furnish and deliver to Johnson, f. o. b. the cars at Winona, Minn., its medicines at the usual wholesale prices, less certain discounts, to be sold by him at the regular retail prices in that part of De Witt county, Tex., lying west of the Guadalupe river, except in incorporated municipalities. It was agreed by Johnson that he would sell no other goods or articles during the term of the contract except those purchased by him from appellant, and he was to sell them only to customers at their residences in the prescribed district. Johnson agreed to make weekly reports of sales made by him and to pay for the goods so furnished him at such weekly periods or in cash within ten days from date of invoice, in which latter event he was to be allowed a discount. Any goods unsold by Johnson appellant agreed to take back, f. o. b. cars at Winona, if tendered in as good condition as when shipped. It was further provided that Johnson should have no right to incur any "debt, obligation or liability of any kind" on account of appellant, and that appellant should in no wise share in the expenses or profit of Johnson's ventures, and that in event of Johnson's default in any of the terms of the contract appellant could terminate same at once by giving written notice by mail.

The following clause is inserted into the contract: "The party of the second part (Johnson) hereby promises and agrees to pay to said company, at Winona, Minnesota, during the term of this agreement, payment of which is hereby extended by said company (appellant) to such time, the amount due it for medicines, extracts and other articles, sold and delivered to him under a former agreement."

Appended to the contract is the following agreement signed by the appellees:

"In consideration of the execution and delivery of the foregoing agreement by the J. R. Watkins Medical Company, and the sale and delivery by it to the party of the second part, of its medicines, extracts and other articles, and the extension of the time of payment of the amount due from him to said company, as therein provided, we, the undersigned, jointly and severally guarantee full and complete payment of each and all of the same, at the time and place and in the manner in said agreement provided.

                W. Thomas,        Stockman,  Cuero, Texas
                Chas. G. Breeden, Merchant,  Cuero, Texas
                J. K. Irwin,      Farmer,    Cuero, Texas
                Wm. Lienhard,     Farmer,    Cuero, Texas."
                

It is not contended by appellants that this was a contract of agency, and we will not discuss that aspect of the case, but treat it as a contract for the sale of goods.

The first proposition under appellant's first assignment of error is as follows: "The contract between plaintiff and defendants, as fully described in the petition, constituted and was a part of interstate commerce, for which reason the anti-trust laws of the state of Texas had no application thereto."

The second proposition is as follows: "The contract sued upon by plaintiff, and involved herein, did not violate the laws of the United States, regulating interstate commerce, more especially that which is commonly known as the Sherman Anti-Trust Law."

In considering these propositions, we must proceed upon the theory that but one question is to be considered; that is, whether the court a quo had jurisdiction to render the judgment herein. This for the reason that we decide, in the first place, that the contract in question is violative of the anti-trust laws of Texas, and, in the second place, that the sale of the goods by the appellant to Johnson was interstate commerce.

The contract is violative of title 130, c. 1, arts. 7796 and 7798, R. S. 1911, it clearly showing by its terms an intention to combine the capital, skill, and acts of the parties to fix and maintain a standard of prices upon a certain commodity and to prevent competition in a given territory. Fuqua v. Pabst Brewing Co., 90 Tex. 298, 38 S. W. 29, 750, 35 L. R. A. 241; T. & P. Coal Co. v. Lawson, 89 Tex. 394, 32 S. W. 871, 34 S. W. 919; Texas Brewing Co. v. Templeman, 90 Tex. 277, 38 S. W. 27.

That the sale of the goods by appellant to appellee was interstate commerce cannot be doubted. "Interstate commerce" consists of intercourse or traffic between citizens of different states. Barnhard Bros. v. Morrison, 87 S. W. 376; Houston & Galveston Navigation Co. v. Dwyer, 29 Tex. 376. And the sale of goods by a citizen in one state to a citizen in another state, the goods to be shipped from one to the other, is "interstate commerce," even when the sale is made by an agent of the seller in the state of the buyer. Bateman v. Milling Co., 1 Tex. Civ. App. 90, 20 S. W. 931; McCall v. Stiff, 142 S. W. 659.

Does it follow from these conclusions that the contract between the parties to this suit falls only under the interstate commerce regulations, and that it is not governed by the anti-trust laws of the state of Texas? We recognize the difficulty of this question and enter upon its discussion with some diffidence. There are two lines of decisions in this state which seem to create a conflict upon the question which we have been unable fully to reconcile. The leading case, of Fuqua v. Pabst Brewing Association, seems to us to be the most sound and well considered of the decisions upon the subject, and we believe that most of the cases are entirely consistent with the doctrine as there announced by Mr. Justice Denman. That was a case very similar in its nature to the one before us. The brewing company had shipped quantities of beer to appellant under a contract similar in many respects to the one in this case. Suit was filed upon an account accrued under the contract, against the sureties of the purchasers. The trial court gave judgment upon the account which was affirmed by the Court of Civil Appeals. The question of the validity of the contract under the anti-trust statutes of Texas was not raised until the petition for writ of error was presented to the Supreme Court. Yet the Supreme Court considered the question and passed upon it as fundamental and determinative of the whole case. In disposing of the case, the court said: "In the celebrated `Original Package Case' of Leisy v. Hardin, 135 U. S. 100 [10 Sup. Ct. 681, 34 L. Ed. 128]...