Leech v. Farmers' Tobacco Warehouse Co.

• Decision Date: 31 October 1916
• Parties: LEECH ET AL. v. FARMERS' TOBACCO WAREHOUSE CO.
• Court: Kentucky Court of Appeals

188 S.W. 886

171 Ky. 791

LEECH ET AL. v. FARMERS' TOBACCO WAREHOUSE CO.

Court of Appeals of Kentucky.

October 31, 1916

Appeal from Circuit Court, Madison County.

Suit by the Farmers' Tobacco Warehouse Company against J. S Leech and others. From a judgment for plaintiff, defendants appeal. Judgment reversed, with directions to proceed in conformity with the opinion.

John Noland and W. S. Moberley, both of Richmond, Allen & Duncan of Lexington, and Pendleton, Bush & Bush, of Winchester, for appellants.

B. A Crutcher, of Winchester, and Chenault, Wallace & Wallace, of Richmond, for appellee.

CARROLL J.

This is a suit brought by the Farmers' Tobacco Warehouse Company against J. S. Leech, J. S. Thomas, John Smith, individually and as agent of the J. P. Taylor Tobacco Company, Charles W. Stewart, individually and as agent of the E. J. O'Brien Company, and W. P. Judy, individually and as agent of the R. J. Reynolds Tobacco Company, to recover damages on account of an alleged conspiracy entered into by the persons named in their individual capacities to injure the business of the company. The Taylor Company, the O'Brien Company, and the Reynolds Company were made defendants upon the theory that these companies were liable for the acts and conduct of their agents, Smith, Stewart, and Judy, in their efforts to destroy the business and property of the tobacco company. The petition was filed on March 2, 1914, and, after setting out that the Farmers' Tobacco Warehouse Company was a corporation organized for the purpose of receiving, storing, and selling on the floor of its warehouse, located in Richmond, Ky. tobacco of farmers who brought their tobacco to this house for sale, charged, in substance:

That Leech and Thomas as individuals, and the Taylor Company through its agent, Smith, the O'Brien Company through its agent, Stewart, and the Reynolds Company through its agent, Judy, were engaged in 1913 and 1914, and had been for several years prior thereto, in the business of buying tobacco on the tobacco market in Richmond. That during the tobacco season of 1913-14 there were, besides it, two other tobacco warehouses in Richmond, to wit, the Madison Tobacco Warehouse Company, and the Home Loose Leaf Warehouse Company, engaged in competition with each other in conducting the same character of business. That the defendants "did, in January, 1914, maliciously, unlawfully, and wickedly conspire, combine, confederate, and agree together, between and among themselves, to estrange and alienate the patrons of this plaintiff, both growers of tobacco and buyers of tobacco, and to oppose and ruin the trade with, and the good will towards, the plaintiff, and to destroy it, and to drive the plaintiff completely out of business, by circulating, and causing to be circulated, false and injurious reports against the plaintiff, such as that it should not be in the market at Richmond; that it was not needed; that it ought to be put out of business; that it would be put out of business before a certain time; that the farmers should bring their tobacco to the Madison Tobacco Warehouse and the Home Loose Leaf Warehouse, as they could get a better price for their tobacco there; and that the plaintiff's officers and stockholders were thieves and robbers. That the defendants did, on the 29th day of January, 1914, go out to the plaintiff's warehouse, for which day a sale of tobacco was scheduled, and, by agreement, understanding, and conspiracy by, between, and among themselves, refused to bid reasonable prices for tobacco, made ridiculously low bids on tobacco that day, so as to make the sale at the plaintiff's house a perfect joke and a farce, and to embarrass the plaintiff's business and drive its patrons to the other two warehouses, and to discriminate against this plaintiff, to the benefit of the other said warehouse companies. That when said ridiculously low prices were bid by defendants, their bids were rejected by the growers, or those in charge of the sale, in accordance with the latter's rights. The defendants, without any fault on the part of the plaintiff, walked out of plaintiff's warehouse in a body, held a meeting later in the day, at which they agreed and conspired among and between themselves not to return to buy at the plaintiff's warehouse, and notified the plaintiff of that fact. * * *

"That as a result of said action and conspiracy on the part of the defendant buyers a great deal of the tobacco, in fact, the greater part of it, on the floor and in the shed of the plaintiff company's warehouse for sale there was removed and taken to the other two said warehouses in the Richmond, Ky. market, for sale, and in which latter said warehouse companies some of said defendants had pecuniary interest. That growers, who had arranged to sell their tobacco at the plaintiff's warehouse, lost confidence in the market there on account of the unlawful acts of the defendants, as hereinbefore described and hereinafter to be described, and naturally took their tobacco elsewhere for sale, thus unlawfully and maliciously drawing away from the plaintiff its patrons and its business, preventing it from handling and selling many thousands of pounds of tobacco over its floors, which it would otherwise have sold, thus causing great, permanent, continuing, and irreparable injury to this plaintiff. That said injurious reports originated and circulated by the defendants, and the reports of said unlawful acts of the defendants, have been circulated and have reached far and wide over Madison and many other counties, and to the tobacco growers of said counties, so as to have destroyed, ruined, and impoverished this plaintiff in its business. * * *

"That said combination, agreement, conspiracy, and acts, as above alleged, on the part of the defendants was entered into and done by them for the purpose of wrongfully discriminating against the plaintiff in favor of the two other said warehouse companies on the Richmond tobacco market, and for the purpose of regulating, controlling, and fixing the price of loose leaf tobacco; and that said combination, agreement, understanding, and conspiracy was entered into by said defendants for the purpose, and having the effect, of placing the whole management and control of the loose leaf tobacco business on the said Richmond tobacco market in the hands of the Madison Tobacco Warehouse Company and the Home Loose Leaf Warehouse Company, with the intent and to have the effect to limit, fix, or to establish, or to change the price and the sale of all the loose leaf tobacco on the said Richmond tobacco market. * * *

"That by reason of said unlawful and malicious agreement, understanding, conspiracy, and acts of the defendants, as hereinbefore alleged, the plaintiff's trade and good will to its business has suffered permanent and irreparable injury; its business has been in effect completely destroyed, ruined, and impoverished, to this plaintiff's damage in the sum of $40,000." By consent of parties the petition was traversed of record, and thereafter the case went to trial before a jury, with the result that there was a verdict and judgment against Leech for $2,000, against Thomas for $2,000, against Smith and the Taylor Tobacco Company for $2,000, against Stewart and the O'Brien Company for $2,000, and against Judy and the Reynolds Tobacco Company for $2,000. From that judgment this appeal is prosecuted.

A number of grounds for reversal are presented by counsel for the appellants, but as we have reached the conclusion that the motion made and overruled, to direct the jury to return a verdict in their favor, should have been sustained, we will confine the opinion to a statement of the reasons that have induced us to come to this conclusion.

Before, however, entering upon a discussion of the facts, it may be well to state the principles of law controlling cases like this, for the purpose of showing that, when measured by these principles, the evidence did not sufficiently show the conspiracy charged to warrant the submission of the case to a jury, although the petition stated a good cause of action.

The rule, so well established that there is really no conflict in the authorities, is that if two or more persons enter into a conspiracy, that is, an unlawful agreement or arrangement for the purpose of affecting injuriously or destroying the business of another person or corporation, and in pursuance of this conspiracy, and for the purpose of carrying it out, circulate, or cause to be circulated, false and damaging reports against the person whose business it is sought to injure or destroy, or commit acts tending to accomplish the object of the conspiracy, and the effect of the reports or acts is to injure or destroy the business affected, the persons engaged in the conspiracy will be individually and jointly liable for the damage the aggrieved party has sustained. But the gist of the offense is the damage, and not the conspiracy. Persons may enter into a conspiracy for the purpose of injuring or destroying the business of another, but unless as a result of this conspiracy the business intended to be injured or destroyed has been injuriously affected or destroyed, no cause of action will lie.

It is also well recognized that as it is extremely difficult, if not impossible, to establish the conspiracy by direct evidence, it is allowable to show it by circumstances of various natures, and by separate incidents and isolated acts and utterances which, although by themselves not sufficient to establish a conspiracy, yet when collected and put together are sufficient to show it. And so a wide latitude in the introduction of evidence tending to establish the conspiracy is admissible when the various facts and circumstances developed...