Martens v. Barrett, 16450.

• Decision Date: 10 June 1957
• Docket Number: No. 16450.,16450.
• Citation: 245 F.2d 844
• Parties: H. W. MARTENS and Robert A. Maurin, Jr., Appellants, v. Carl F. BARRETT, B. C. Farcell and The Texas Company, Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

245 F.2d 844 (1957)

H. W. MARTENS and Robert A. Maurin, Jr., Appellants, v. Carl F. BARRETT, B. C. Farcell and The Texas Company, Appellees.

No. 16450.

United States Court of Appeals Fifth Circuit.

June 10, 1957.

Amos L. Ponder, Jr., New Orleans, La., Louis J. Ourso, Jr., Henry A. Mentz, Jr., Hammond, La., for appellants.

Amzy B. Steed, New York City, Hugh M. Wilkinson, C. Ellis Henican, New Orleans, La., Milton Handler, New York City, Oscar John Dorwin, Stanley D. Robinson, New York City, Jack D. Childers, Houston, Tex., Joel C. Coleman, New York City, of counsel, for appellees.

Before BORAH, RIVES and BROWN, Circuit Judges.

JOHN R. BROWN, Circuit Judge.

Because, to the District Court, it was uncontradicted that the operation of the service station was wholly that of the incorporated company M & M Corporation, and not that of its sole stockholders who sued as individual plaintiffs, the complaint for treble damages under the Anti-trust Acts jointly against The Texas Company, the Lessor-Seller and its local consignment distributor, was dismissed on summary judgment since the plaintiffs were not injured in their business or property whatever damage might the corporation have sustained.

We agree. And so doing, this makes it unnecessary to pass upon the contentions of The Texas Company that refusal to reconduct¹ the lease of its filling station for a third year, even though motivated, as alleged, as a reprisal for the plaintiffs' objecting to stocking and selling a particular manufacturer's line of TBA (tires, batteries and accessories) could not violate the Anti-trust laws since a single manufacturer is entitled to select its customers or dealers as it alone sees fit,² or the contrary rival claim of plaintiffs that, in its operations, the lease was but a form of restrictive dealer restraints elsewhere condemned.³

A claim for treble damages, as is this one, originates in Section 4 of the Clayton Act, 15 U.S.C.A. § 15. By it, this punitive sanction in enforcement of the statutory Anti-trust policy, is limited to "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws." A corporation is a "person," 15 U.S.C.A. § 12. And it is universal that where the business or property allegedly interfered with by forbidden practices is that being done and carried on by a corporation, it is that corporation alone, and not its stockholders⁴ (few or many), officers, directors, creditors or licensors, who has a right of recovery, even though in an economic sense⁵ real harm may well be sustained as the impact of such wrongful acts bring about reduced earnings, lower salaries, bonuses, injury to general business reputation, or diminution in the value of ownership.

And yet, on really undisputed facts, that is what Martens and Maurin sought below. To be sure, the lease and collateral sales contract with The Texas Company was with them as individuals and contained a condition forbidding assignment without consent (but which could not be unreasonably withheld). And, for our purposes, the operations from June 1, 1952 to September 15, 1952 may even be treated initially as a partnership activity. But on that date, under specific advice of competent Louisiana counsel who cautioned them that continued operations of this filling station and another business (garment factory) just recently acquired exposed them, and their personal estates, to unlimited and possibly spectacular liabilities, they created the Louisiana Corporation, M & M Corporation.

The articles of incorporation declaring the objects and purposes for which the corporation was "organized and the nature of the business to be carried on by it" specified with precision the purpose to operate a garment factory and, here important, "to own, lease or operate a General Service Station Business * *." And, significantly, the registered office, required by Louisiana law, was described as "311 West Thomas Street, Hammond, Louisiana" which was, of course, the service station owned by The Texas Company and leased to the plaintiffs "* * * primarily for the operation of a gasoline service station and the sale of automobile accessories * * *."

When it was set up, everything was done to put the operation under the corporation. The inventory and equipment which Martens and Maurin had acquired from the predecessor lessee of the station was transferred at the original cost (approximately $3000) and credited to Martens' capital account against his stock subscription. Subsequently each contributed further cash in payment of their outstanding stock subscriptions totaling $11,000. The books of account reflect that such capital contributions were used to purchase and pay for current inventories, supplies and equipment for the service station and to finance the accounts receivable from the station's customers. Detailed accounting records show that all income from operations comprising sales of gas, oil, lubrication, candy and drinks, accessories, grease and mechanics' labor was attributed to the corporation. And offsetting such corporate income was the cost of inventory of gas, oil, candy, lubricants and accessories sold, and operating expenses, equally detailed, comprising labor, office supplies, bad checks, cash shortage, repairs, advertising, taxes, dues, utilities, telephone, licenses, insurance, bad debts, and the like. Of acute significance was the fact that the salaries and compensation for Martens and Maurin in the actual operation and supervision of the station was likewise paid by and treated as a corporate obligation.

And, to cap all of this, adopting a fiscal year coinciding with the lease period (June 1 to May 31), the corporation, by sworn federal income tax return for each of the two years signed by its President Maurin "under the penalties of perjury", answered the inquiry on Form 1120 "Principal business activity" as "service station" and "filling station" respectively, and then reported all of the income and expenses of the service station as that of the corporation. Included as scheduled deductions was the compensation of the officers Martens and Maurin, depreciation on equipment including that transferred at time of incorporation and, the operating expenses detailed above, comprehending such vital operational matters as bad debts and bad checks. All of this was expressly related back to June 1, 1952, so that the parties, and their corporation, treated it as a corporate activity from its inception.

Keyed to this, though filed on a calendar year basis, were the personal federal income tax returns of Martens and Maurin which reported as income to each of them the compensation paid, or payable, by the corporation and deducted by it as an expense. Consistent with this pattern, no partnership return of any kind was filed and in no personal return did either of them take, as deductions, any of the operating expenses, depreciation, etc., claimed by the corporation.

And if, in the face of this staggering record, there were any possibility of contrary inferences, they were categorically destroyed by the articulate, positive admissions of the parties themselves, each an officer and director, the most emphatic⁶ of whom was the president himself.

The fact that in bank accounts, insurance policies, purchase accounts or the like, the name "M & M Service Station" might have been used is of no importance and raised no questions of fact. The trade name was, first, almost identical with the corporate name. But, in any event, when in all decisive respect, such as the treatment of income, expenses, determination of profits, losses, return and payment of taxes, the business was in fact conducted as a corporate entity, inaccuracy or carelessness, inadvertent or purposeful, in the description in the name of the business would be quite...