Oliver Bros. v. Federal Trade Commission

• Decision Date: 25 March 1939
• Docket Number: No. 4349.,4349.
• Citation: 102 F.2d 763
• Parties: OLIVER BROS., Inc., et al. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — Fourth Circuit

102 F.2d 763 (1939)

OLIVER BROS., Inc., et al. v. FEDERAL TRADE COMMISSION.

No. 4349.

Circuit Court of Appeals, Fourth Circuit.

March 25, 1939.

T. Russell Cather, of Winchester, Va., and Felix H. Levy, of New York City (John D. Swartz, of New York City, on the brief), for petitioners.

Allen C. Phelps, Sp. Atty., Federal Trade Commission, of Washington, D. C. (W. T. Kelley, Chief Counsel, Federal Trade Commission, of Washington, D. C., on the brief), for respondent.

Raymond N. Beebe, Adrien F. Busick, Seth W. Richardson, and Davies, Richberg, Beebe, Busick & Richardson, all of Washington, D. C., amici curiæ.

Before PARKER and SOPER, Circuit Judges, and WYCHE, District Judge.

PARKER, Circuit Judge.

This is a petition to review an order of the Federal Trade Commission directing petitioners to cease and desist from payment or receipt of fees or commissions in violation of section 2(c) of the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C.A. § 13(c). The order was entered in a proceeding instituted against Oliver Brothers, Inc., hereafter referred to as Oliver, a purchasing agent for wholesale distributors, certain of the buyers whom it represented in making purchases and certain of the manufacturers or sellers from whom purchases were made. The charge was that, while acting as agent for the buyers, Oliver received brokerage commissions from the sellers which it credited or passed on to the buyers. The case was heard on a stipulation that the record made in the proceeding of the Commission against the Biddle Purchasing Company et al. should be adopted as the record correctly describing the business practices of Oliver; and the order in the Oliver case followed, in substance, the findings and order in the Biddle case. The Biddle order was reviewed by the Circuit Court of Appeals of the Second Circuit and petition to set it aside was denied in Biddle Purchasing Co. v. Federal Trade Commission, 2 Cir., 96 F.2d 687, 689, and certiorari was denied by the Supreme Court. 59 S. Ct. 101, 83 L.Ed. ___. To the petition that we review and set aside the order in the Oliver case, the Commission has filed a cross petition asking a decree for the enforcement of the order.

There is, in reality, no dispute as to the facts, but only as to the inferences to be drawn from admitted facts and constituting mixed questions of law and fact. All of the petitioners are engaged in interstate commerce. Oliver furnishes a purchasing service to over 300 distributing concerns scattered over the United States, who are principally wholesalers of automobile, electrical, radio, mill, machine, plumbing, steam and hardware supplies. It has an office in New York and a branch office in Chicago. It has several salesmen who travel throughout the United States to solicit distributing concerns to purchase its market information and purchasing services and who, at times, contact manufacturers and processors. It has also a number of buyers and assistant buyers who place orders for its subscribers and deal with manufacturers, processors and producers in their behalf. It examines and tests the wares of such manufacturers and producers and obtains from them prices and descriptions of goods which it sends to its subscribers. It furnishes the subscribers a loose leaf price book, showing the prices and sources of supply of the merchandise in which they are interested, and keeps this book current by the issuance of price sheets and bulletins from time to time, as prices and sources of supply change. It also makes purchases for its subscribers of the goods described in its information service and gives them the benefit of the brokerage commissions which it collects from the sellers upon such purchasers. The Commission found that these brokerage commissions were passed on to the buyers with the knowledge of the sellers. Petitioners challenge this finding in so far as it relates to knowledge of the sellers; but an examination of the record shows that it is amply sustained by the testimony and that the matter was one of common knowledge in the trade. (See Biddle transcript of record pages 165, 193, 283, 284, 314, 321, 327, 347, 372, 379, 380, 387, 490, 544, 582, 596, 608, 615, 635, 645, 656, 675, 688, 741.)

For the informational and purchasing services thus rendered its subscribers, Oliver receives a stipulated monthly compensation of $25 and upward. The brokerage commissions received by 86% of the subscribers on their purchases amount to less than the amount paid Oliver. Those received by the remaining 14% are in excess of the amount so paid.

A written contract is entered into between Oliver and each of its subscribers. This contract is on stationery describing Oliver as "Resident buyers for wholesalers of hardware, iron, steel, metals etc." The following provisions thereof are pertinent and illuminating:

"We hereby agree to act as your New York, Chicago and Pittsburgh Resident Representatives in the capacity of Purchasing Agents.

"We agree to furnish you our loose leaf Price Book and send you our General Service covering lines as per the subject hereof; also to send you Oliver Brothers' Comment Letters, letters on Market Conditions, lists of special offerings, and submit to you other information in the way of prices and market information which we may consider to be of interest to you.

"We will use our best efforts to secure the lowest possible prices on your inquiries or orders, we will forward to the manufacturers or parties with whom we have favorable arrangement such orders for merchandise as you may send to us.

"Orders which we may receive from you or letters which we may receive are to be regarded as authority to act as your Agents in connection with any transaction which may transpire between us. While we will use our best efforts in acting as your Agent it is understood that we will not be liable for the failure of any manufacturer of supplies to perform his agreements or promises in connection with quotations or shipments.

"It is mutually agreed that all communications between us in the way of correspondence, Comment Letters, letters on Market Conditions or Confidential Price Sheets, shall be treated as strictly confidential and used solely in connection with your own business and shall not be divulged to other parties nor procured for the use of other parties."

The facts with respect to the purchases made by Oliver are thus stated by the Commission:

"Oliver receives daily from its subscribers approximately one hundred orders. When a subscriber forwards an order to Oliver, usually at a specified price, Oliver transmits the order to the seller. The seller ships the product direct to the buyer, in most cases billing the buyer at the price specified in the order. The buyer in most cases makes payment direct to the seller. The seller then sends a commission or brokerage on the transaction and Oliver pays this to the buyer or credits it to his account. If a buyer fails to name the purchase price, he expects to get the last price quoted by Oliver in its bulletins, or a lower price. If Oliver finds that the market has advanced he communicates with the buyer and confirms the order at the new price before transmitting it to the seller. The buyer in some cases names the seller whose products are wanted, but in some cases he relies upon Oliver to transmit the order to some producer who will supply goods of the quality and standard required."

And the whole course of business between Oliver and its subscribers is summed up in paragraph 11 of the Commission's findings as follows:

"The contract between respondent Oliver Brothers, Inc., and its subscribers is construed by the parties thereto as being a contract for the sale and purchase of the Oliver market information service with a privilege extended to the buyers of using the Oliver purchasing services at their option. The buyers pay the monthly fee stipulated in the contract for the market information service. The buyers exercise their option to use the purchasing services of Oliver Brothers, Inc., in order to secure a discount in price from the current market price and the buyers when purchasing commodities through Oliver compute the net price at which the purchase is made as being the quoted price less the fee or commission paid by the seller as brokerage to Oliver and by Oliver transmitted to them. The buyers, in their bookkeeping, do not treat the brokerage fees and commission received from respondent Oliver Brothers, Inc., as being an offset to the monthly fee paid by them to Oliver. The amount of the monthly fee paid by the buyers to Oliver is fixed at the time the contract is made, but the amount of the brokerage fees and commissions which may be received by a given buyer from the utilization of the Oliver purchasing service is unknown and incapable of ascertainment at the time the contract is entered into."

In its tenth finding the Commission states its conclusions with respect to the agency of Oliver and the services rendered by it as follows:

"In all of the purchasing transactions which the respondent Oliver Brothers, Inc., executes for its buyers, Oliver Brothers, Inc., is the agent and representative of the buyer, and acts in fact for such buyer and in his behalf, and is subject to his control, insofar as such purchasing transaction is concerned. Said respondent Oliver Brothers, Inc., in such purchasing transaction is neither the agent nor representative of the seller nor does it act for or in behalf or is it under the control of such seller. Such services as respondent Oliver Brothers, Inc., may render to the seller in selling his commodities are incidental to the particular purchase and sale transaction, and if any services are so rendered by Oliver in connection with the sale or purchase of such commodities, such services are donated by Oliver Brothers, Inc., to the seller. There is not, in fact, any payment of brokerage commissions made by any of respondent sellers to respondent Oli...