LIVE POULTRY DEALERS'PROTECTIVE ASS'N v. United States

• Decision Date: 02 December 1924
• Docket Number: No. 116.,116.
• Parties: LIVE POULTRY DEALERS' PROTECTIVE ASS'N et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Second Circuit

4 F.2d 840 (1924)

LIVE POULTRY DEALERS' PROTECTIVE ASS'N et al. v. UNITED STATES.

No. 116.

Circuit Court of Appeals, Second Circuit.

December 2, 1924.

Koenig, Sittenfeld & Aranow, of New York City (Goldstein & Goldstein, Jonah J. Goldstein, and Aiken A. Pope, all of New York City, of counsel), for appellants.

William Hayward, U. S. Atty., of New York City (David A. L'Esperance, Jr., and Rush H. Williamson, both of New York City, and Ryland W. Joyce, Sp. Asst. U. S. Atty., of Washington, D. C., of counsel), for the United States.

Before ROGERS and HOUGH, Circuit Judges, and LEARNED HAND, District Judge.

LEARNED HAND, District Judge.

The case comes up upon an injunction pendente lite, issued upon a petition in equity under the Sherman Act against the defendants, enjoining them from certain practices adopted by them in the city of New York in the live poultry business. The corporate defendant was organized in 1914 by certain wholesale buyers of live poultry in the city of New York, who number in all somewhat over 300. Of these 178 have joined the association, whose general purposes it is not here necessary to state. Live poultry, which is sold at once upon its arrival, is shipped in carload lots from the Middle Western states to Hoboken, where it is put into crates and sent across the river. The consignees are receivers or commission merchants, who, acting as the shippers' agents, sell the poultry for them on its arrival here. They are only 18 in number. The poultry is sold either in the city of New York, at the Washington Market, or in small quantities at Hoboken, whence the buyer brings it here.

Before the defendants adopted the practices of which the plaintiff complains, the prices for live poultry had been determined without any rule and according to the higgling of the buyers and sellers. The defendants assert (and it must be accepted upon this proceeding) that during those times the market was in what they call a "demoralized" condition, prices being often determined by "wash" or "fake" sales, which did not represent real transactions. This resulted in frauds upon the buyers, and in the end a higher price to the consumers. It was the purpose of the association, by "stabilizing" prices, to give both the buyers and sellers a reliable guide upon which to deal, and thus to eliminate opportunities for bad trade practices.

Before the 1st of June, 1923, the defendants determined to regulate the purchase of this poultry in execution of these purposes. They appointed a committee of seven of their members, who were daily to treat with the receivers or commission men, and after negotiations, with an eye upon the prospective supply and the demand, to establish a price for that day, which should obtain as to all purchases made by any member of the association. On June 1, 1923, they sent out a circular announcing the names of the seven members who had been appointed, and who were "fully authorized to bid upon the prices of poultry in order to obtain a market price thereof." Any four members of this committee should have power to act. In pursuance of this plan the committee went daily to the receivers and commission men, and after negotiation fixed prices which they conceived to be proper for that day. In many cases the poultry would be bought and shipped to the buyers before the price had been adjusted, and the contracts later liquidated in accordance with the prices so fixed.

The plaintiff asserts that in execution of this plan the association has threatened some receivers and commission men with a boycott if they should sell to any members of the association at other prices than those fixed and in some cases to other buyers than members. The last allegation, although supported by affidavits, is in dispute, though the defendants concede that as a matter of its own internal discipline the association has insisted that the commission men shall sell to members only at the agreed prices, and has enforced that insistence by threatening not to deal with such as would not observe them.

The defendants raise two chief objections: First, that the commerce is not interstate; and, second, that the agreement is not an unreasonable restraint of trade. As to the first, it should be noticed that the poultry reaches Washington Market after a pause at Hoboken only sufficient to put it into crates. It is, moreover, in proof that the sales take place on the same day as the poultry arrives in New York. We ignore such sales as take place in Hoboken, since they add no new feature to the case. So far as touches the point of interstate commerce, such a situation is precisely within Swift & Co. v. U. S., 196 U. S. 375, 25 S. Ct. 276, 49 L. Ed. 518, and Stafford v. Wallace, 258 U. S. 495, 42 S. Ct. 397, 66 L. Ed. 735, 23 A. L. R. 229, both of which concerned the shipment of live stock. It is equally within the decision of Binderup v. Path? Exchange, 263 U. S. 291, 44 S. Ct. 96, 68 L. Ed. 308. The defendant relies chiefly upon Hopkins v. U. S., 171 U. S. 578, 19 S. Ct. 40, 43 L. Ed. 290, and Anderson v. U. S., 171 U. S. 604, 19 S. Ct. 50, 43 L. Ed. 300.

It is quite possible that those cases would have been otherwise decided to-day; at any rate both in Swift v. U. S., supra, and Stafford v. Wallace, supra, they were distinguished by their especial circumstances. In Hopkins v. U. S., supra, the combination, which was held not directly to affect interstate commerce, was between the commission merchants only, who are the analogue here of the sellers' local agents. Besides, the combination only affected their internal affairs, though it did exclude outsiders. Whether an agreement between them fixing prices would even then have passed is certainly very doubtful, because in Anderson v. U. S., supra, where the combination was between the buyers, the court especially reserved the question whether it directly affected interstate commerce, and whether, had it fixed prices, it would have gone scathless. They held that a combination intended only to prevent competition of the "yard traders," who were free at any time to come in, was not forbidden by the Sherman Act even if it did affect interstate commerce.

The distinction between the direct or indirect effects of a combination is necessarily practical rather than ratiocinative. It is impossible to draw a line which shall be immune from casuistical attack, and perhaps it is unfortunate that the somewhat arbitrary and pragmatic nature of what courts do in such cases has been so frequently disguised by a show of deduction. Happily...