National Harness Mfrs.' Ass'n v. Federal Trade Commission

• Decision Date: 07 December 1920
• Docket Number: 3289.
• Citation: 268 F. 705
• Parties: NATIONAL HARNESS MFRS., ASS'N v. FEDERAL TRADE COMMISSION et al.
• Court: U.S. Court of Appeals — Sixth Circuit

268 F. 705

NATIONAL HARNESS MFRS., ASS'N v. FEDERAL TRADE COMMISSION et al.

No. 3289.

United States Court of Appeals, Sixth Circuit.

December 7, 1920

Leonard Garver, Jr., of Cincinnati, Ohio (Lorbach & Garver, of Cincinnati, Ohio, on the brief), for petitioner.

Marvin Farrington, of Washington, D.C. (Claude R. Porter and Marvin Farrington, both of Washington, D.C., and Walter B. Wooden of Chicago, Ill., on the brief), for respondents.

Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.

KNAPPEN Circuit Judge.

Original petition under section 5 of the Federal Trade Commission Act (Act Sept. 26, 1914, c. 311, U.S. Comp. Stat. Sec. 8836a et seq.) to review an order of the commission requiring petitioner and its co-respondents to cease and desist from certain alleged unfair methods of competition in interstate commerce. The proceeding was brought against both petitioner the National Harness Manufacturers' Association of the United States of America (hereinafter called the Harness Manufacturers' Association, or the petitioner), its officers and the members of its executive committee by name as well as about 20 local associations composing the membership of the Harness Manufacturers' Association, and the Wholesale Saddlery Association of the United States (hereinafter called the Saddlery Association), its officers and the members of its executive committee by name, and a large number of named persons, firms, or corporations composing the membership of that association. The order to cease and desist included both associations. The Saddlery Association asks no review of the commission's order.

The petitioner here assails that order on the grounds, first, that the Federal Trade Commission Act is unconstitutional; second, that the commission had no jurisdiction in this particular case; and, third, that the order to cease and desist is not supported by the evidence.

1. The constitutionality of the act is assailed, first, as assuming--

'to combine legislative, executive, and judicial powers and functions, and to confer them upon one and the same administrative body, contrary to articles I, II, and III of the Constitution, and because it assumes to authorize the commission, which is ostensibly an administrative body, to deprive persons of their property without due process of law, contrary to the Fifth Amendment of the Constitution.'

This proposition is to our minds without merit. Congress plainly has power to declare unfair methods of competition unlawful and to require that their practice cease. This Congress has done by the act in question. It with equal clearness has the power to authorize an administrative commission to determine (a) the question what methods of competition the given trader employs, and (b) provisionally the mixed question of law and fact whether such methods are unfair. These questions being determined against the trader, the administrative requirement to cease and desist, prescribed by Congress, follows as matter of course, but only provisionally. The commission's determination of these questions is not final. Not only does the statute give a right of review thereon, upon application by an aggrieved trader, to a Circuit Court of Appeals of the United States, but the commission's order is not enforceable by the commission, but only by order of court. 'It is for the courts, not the commission, ultimately to determine as matter of law' what the words 'unfair methods of competition' include. Federal Trade Commission v. Gratz, 253 U.S. 421, 40 Sup.Ct. 572, 575, 64 L.Ed. 993.

Throughout the proceedings, not only before the commission, but before the court, the trader is given the right and opportunity to be heard. The act delegates to the commission no judicial powers, nor does it, in our opinion, confer invalid executive or administrative authority. Buttfield v. Stranahan, 192 U.S. 470, 24 Sup.Ct. 349, 48 L.Ed. 525; Union Bridge Co. v. United States, 204 U.S. 364, 27 Sup.Ct. 367, 51 L.Ed. 523; Pennsylvania Railroad v. International Coal Co., 230 U.S. 184, 33 Sup.Ct. 893, 57 L.Ed. 1446, Ann. Cas. 1915A, 315; Coopersville Co. v. Lemon (C.C.A. 6) 163 F. 145, 147, et seq., 89 C.C.A. 595; National Pole Co. v. C. & N.W. Ry. Co. (C.C.A. 7) 211 F. 65, 127 C.C.A. 561. The criticism that the statute makes the commission both judge and prosecutor is too unsubstantial to justify discussion. The constitutionality of the act, against objections similar to those presented here, has recently been sustained by the Circuit Court of Appeals of the Seventh Circuit in a considered and persuasive opinion. Sears, Roebuck & Co. v. Federal Trade Commission, 258 F. 307, 169 C.C.A. 323, 6 A.L.R. 358. None of the petitioner's citations contain, in our opinion, anything necessarily opposed thereto. Upon this record, we have no occasion to consider the construction or effect of the provision of the act which makes conclusive, if supported by testimony, the commission's findings as to facts as distinguished from conclusions of law, or of mixed fact and law. In saying so, however, we must not be understood to intimate that the provision referred to is invalid. ^[1]

The act is also assailed as violating the Fourth Amendment to the federal Constitution, which protects against 'unreasonable searches and seizures,' which petitioner asserts are provided for by the socalled inquisitorial feature of section 9 (Comp. St. Sec. 8836i), in the declaration that 'for the purposes of this act the commission, or its duly authorized agent or agents, shall at all reasonable times have access to, for the purpose of examination, and the right to copy any documentary evidence of any corporation being investigated or proceeded against'; a provision whose enforcement is provided for by section 10 (section 8836j), which subjects any person to fine or imprisonment, or both, 'who shall willfully refuse to submit to the commission or to any of its authorized agents, for the purpose of inspection and taking copies, any documentary evidence of such corporation in his possession or within his control.'

Of this criticism it is enough to say that the provisions in question of sections 9 and 10 are not before this court. The commission has not attempted to exercise them. Section 9 otherwise contains complete provision for enforcing, by subpoena, the attendance and testimony of witnesses and the production of all documentary evidence relating to any matter under investigation. Beyond this the commission has not gone. That one attacking a statute as unconstitutional must show that the alleged unconstitutional feature injures him is settled by a long line of authorities, among which are Tyler v. Judges, 179 U.S. 405, 409, 21 Sup.Ct. 206, 45 L.Ed. 252; Turpin v. Lemon, 187 U.S. 51, 60, 61, 23 Sup.Ct. 20, 47 L.Ed. 70; Hooker v. Burr, 194 U.S. 415, 419, 24 Sup.Ct. 706, 48 L.Ed. 1046.

2. By section 5 of the Federal Trade Commission Act (Comp. St. Sec 8836e) the commission is given jurisdiction, when it has reason to believe that 'any * * * person, partnership, or corporation has been or is using any unfair method of competition in commerce, and if it shall appear to the commission that a proceeding by it in respect thereof would be to the interest of the public. ' Section 4 of the act (section 8836d) defines a corporation as 'any company or association, incorporated or unincorporated,' which either (a) is organized to carry on business for profit and has shares of capital or capital stock, or (b) is 'without shares of capital or capital stock, except partnerships, which is organized to carry on business for its own profit or that of its members. ' The Harness Manufacturers' Association is a voluntary unincorporated association, and thus without capital stock. It is not itself engaged in business. Petitioner contends that it therefore is not within the act. But this contention overlooks the fact that the association is not the only one proceeded against; but that its officers and the members of its executive committee, as well as its membership generally, are included in the proceedings as parties and made subject to the commission's order. The language of the act affords no support for the thought that individuals, partnerships, and corporations can escape restraint, under the act, from combining in the use of unfair methods of competition, merely because they employ as a medium therefor an unincorporated voluntary association, without capital and not itself engaged in commercial business. The order may be enforced by reaching the officers and members, personally and individually. A voluntary association, having many members, may be brought into court by service on its officers and such of its members as are known and can be conveniently reached, sufficient being served to represent all the diverse interests Evenson v. Spaulding (C.C.A. 9) 150 F. 517, 82 C.C.A....