Northwestern Oil Co. v. Socony-Vacuum Oil Co.

Decision Date07 December 1943
Docket NumberNo. 8353.,8353.
Citation138 F.2d 967
CourtU.S. Court of Appeals — Seventh Circuit

Raymond A. Crawford, Wm. P. Crawford, and Crawford & Crawford, all of Superior, Wis., Paul E. Hadlick, of Washington, D. C., and Ralph E. Burdick, of Duluth, Minn., for appellant.

David T. Searls, of Chicago, Ill., Herbert H. Thomas, of Madison, Wis., W. H. Dougherty, of Janesville, Wis., Vinson, Elkins, Weems & Francis, of Houston, Tex., Leon E. Isaksen and Thomas, Orr & Isaksen, all of Madison, Wis., Stanley M. Ryan and Nolan, Dougherty, Grubb & Ryan, all of Janesville, Wis., J. H. Marshutz and Fish, Marshutz & Hoffman, all of Milwaukee, Wis., John C. Zwick, of

Chicago, Ill., and Sturtevant Hinman, of Chicago, Ill., for appellees, Socony-Vacuum Oil Co., Inc., Continental Oil Co., Pure Oil Co., Shell Oil Co., Inc., Sinclair Refining Co., Mid-Continent Petroleum Corporation, and Phillips Petroleum Co.

Before SPARKS and KERNER, Circuit Judges, and LINDLEY, District Judge.

LINDLEY, District Judge.

Plaintiff sued to recover damages alleged to have been incurred by reason of defendants' violation of the Sherman Anti-Trust Law, 15 U.S.C.A. § 1, claiming injury to its business and property under Section 4 of the Clayton Act, 15 U.S.C.A. § 15. At the conclusion of plaintiff's evidence, defendants moved for a directed verdict upon two grounds, — (1), that plaintiff had failed to prove damage, and, (2), that plaintiff had participated in the alleged illegal conspiracy and its execution and was, therefore, in pari delicto with defendants. The court allowed the motion upon the first ground and found it unnecessary to pass upon the second.

Plaintiff is a jobber, reselling gasoline to other jobbers and to retailers and consumers. It purchased from the W. H. Barber Company, who in turn bought from the Tidewater Oil Company. Barber bought at ¼ cent per gallon below the published tank car market and resold to plaintiff at the low of the same market. Plaintiff was assured a margin of 5½ cents per gallon between the tank car price, plus freight, and the normal service station price established from time to time by the Standard Oil Company of Indiana. In January, 1936, this margin was raised to 5 7/8 cents.

Plaintiff resold gasoline in cars to other jobbers at the average of the high and low quotations of the tank car spot market published daily. It resold to dealers at tank wagon rates, which, until August, 1936, were determined by deducting a fixed quantity discount, (Q.D.A.) from established retail station prices. Subsequent to adoption of the so-called Iowa plan, August 29, 1936, a dealer's tank wagon price was posted and plaintiff sold at this figure. It resold to consumers at service station quotations or at the consumers' tank wagon price. The rate at which it sold to consumers and dealers was fixed at all times by the posted prices of the market leader, Standard Oil Company of Indiana, which sells more gasoline than any other company in the middle west, having widespread marketing facilities and reaching almost every community. United States v. Socony-Vacuum Oil Co. et al., 7 Cir., 105 F.2d 809. The Standard service station and tank prices follow regularly the increases and decreases in the tank car market and its formula, — tank car cost, plus freight, plus 5½ cents per gallon, — was adopted by the Department of Agriculture and Markets of the state of Wisconsin in order 23C, which fixed a minimum service station price in Wisconsin. Under this order, which was in effect between February and June, 1935, the published tank car market was the basis for determining the minimum service station price in Wisconsin, and it provided that such price would advance or decline 3/10ths of a cent as the average tank car quotation advanced or declined.

The increases in tank car prices complained of came in March, 1935, and by June 14 of that year had reached 1¼ cents per gallon; during this period, plaintiff's price to dealers and consumers had correspondingly increased 1-3/10ths cents. This situation abided until January, 1936, when plaintiff's cost increased ½ cent and its selling price a like amount. During 1936, plaintiff's buying price was reduced .625 of a cent and its selling price .6 of a cent. In November, 1936, its cost increased ¼ of a cent and in December its selling price increased 3/10ths of a cent.

Plaintiff introduced evidence of the total cost of all gasoline purchased under the alleged illegally increased prices and rested without proof of realization upon sales. It apparently believed that proof of increased cost, due to an illegal fixing of prices on the part of defendants, was sufficient to justify recovery of damages under the Clayton Act without showing whether it had in fact escaped damage by fixing equivalently larger selling prices, thus passing on the increased cost to its purchasers.

Its proof further disclosed that, in the meetings and conferences as a result of which stabilization of prices came about, resulting in increased cost of gasoline, plaintiff's officers participated and cooperated; that they were well advised that the program was intended to establish an increased tank car quotation in order to maintain retail prices in its territory and that plaintiff's officers requested its employees to cooperate with the participants in promoting the plan. The letters written by its officers and the testimony clearly establish that plaintiff was an active agency in working out with defendants and others the scheme of which it now complains and in raising and maintaining prices from which it now claims damage has accrued to it.

Defendants were among those indicted and convicted, in the District Court of the Western District of Wisconsin, of violation of Section 1 of the Sherman Act, 15 U.S. C.A. § 1, affirmed in United States v. Socony-Vacuum Oil Co., Inc., 310 U.S. 150, 60 S.Ct. 811, 84 L.Ed. 1129. The essence of the charge was illegal fixing of increased retail prices of gasoline by defendants by raising tank car prices and thereby, in turn, eventually, retail prices. Upon that conviction plaintiff relied as a basis for recovery in this cause.

The Act, 15 U.S.C.A. § 15, provides that one injured in his business or property by reason of anything forbidden in the anti-trust laws may sue and recover threefold the damages sustained. The statutes were intended to advance the public welfare by promoting free competition and preventing undue restriction of trade and commerce. But by the provision which gives to one damages for his personal benefit, no action is created because of the conspiracy alone; the right of recovery by a private party is limited to the damages actually incurred by him. He must plead and prove a pecuniary loss of or injury to his business or property. Sidney Morris & Co. v. National Ass'n of Stationers, Office Outfitters & Manufacturers, 7 Cir., 40 F.2d 620; Keogh v. Chicago & North Western Railway Company, 7 Cir., 271 F. 444; Maltz v. Sax, 7 Cir., 134 F.2d 2; Pennsylvania Railroad Company v. International Coal Mining Co., 230 U.S. 184, 33 S.Ct. 893, 57 L.Ed. 1446, Ann.Cas.1915A, 315; Davis v. Portland Seed Co., 264 U.S. 403, 44 S.Ct. 380, 68 L.Ed. 762.

The cases cited in support of plaintiff's view that it might recover upon showing merely wrongful increase of prices to purchasing jobbers, irrespective of whether the latter correspondingly raised their retail prices or passed on the additional cost to the consumer, are largely those having to do with recovery of improper freight charges under the Commerce Act. But, in Pennsylvania Railroad Company v. International Coal Mining Company, 230 U.S. 184, 33 S.Ct. 893, 57 L.Ed. 1446, Ann.Cas. 1915A, 315, the Supreme Court pointed out the obvious distinction between an action to recover freight overcharges and one to recover damages because of unfair discrimination. The carrier is bound to establish published rates and,...

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