Pacific States Paper Trade Ass'n v. Federal Trade Commission

• Decision Date: 09 March 1925
• Docket Number: No. 4217.,4217.
• Parties: PACIFIC STATES PAPER TRADE ASS'N et al. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — Ninth Circuit

4 F.2d 457 (1925)

PACIFIC STATES PAPER TRADE ASS'N et al. v. FEDERAL TRADE COMMISSION.^*

No. 4217.

Circuit Court of Appeals, Ninth Circuit.

February 9, 1925.

Rehearing Denied March 9, 1925.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Edward J. McCutcheon, Warren Olney, Jr., and McCutcheon, Olney, Mannon & Greene, all of San Francisco, Cal., Hamblen & Gilbert, of Spokane, Wash., and Chriss A. Bell, of Portland, Or., for petitioners.

W. H. Fuller, Chief Counsel of Federal Trade Commission, of Washington, D. C., and D. N. Dougherty, of San Francisco, Cal., for respondent.

Before GILBERT, HUNT, and RUDKIN, Circuit Judges.

RUDKIN, Circuit Judge (after stating the facts as above).

As already stated, the case was submitted to the commission on an agreed statement of facts. Outside of and in addition to the agreed statement, however, the commission made certain findings or deductions of its own. These additional findings will be accepted by the court in so far as they are based upon proper and legal inferences from the facts stipulated, but otherwise they must be disregarded. Thus, in addition to the stipulated facts as to the use made of the price lists adopted by the several local associations, in making sales in other states, the commission found that such use has a natural tendency to limit competition and fix prices in such other states. We may say at the outstart that so much of the desist order as forbids the use of these price lists in combination would be proper, if justified by the facts, but use in combination is neither stipulated nor found. There is no division of territory between the different local associations, but the members of each habitually serve a loosely defined territory, in which the bulk of their business is done, and which is regarded by them as peculiarly within the sphere of their merchandising activities. Such territory is that which is naturally tributary to the jobbing center, where the members of such associations are located and within which jobbing or wholesale dealers so located have an advantage over similar dealers elsewhere in competition with them, by reason of such factors as lower freight rates, nearness of distance, and accustomed trade channels.

The use of a price list of some kind for the information and guidance of salesmen in taking orders and making sales is almost a necessity, and it is going very far to say that the mere use, without combination or agreement, of a particular price list, which the salesmen are not bound to follow, and which differs or may differ from the price lists used by other salesmen in the same locality, has such a tendency to fix prices or limit competition as to bring it within the condemnation of the Anti-Trust Act (Comp. St. §§ 8820-8823, 8827-8830). The principle involved is perhaps more important than the right to use any particular price list, but we do not think that the prohibition is justified by the stipulated facts or by any proper or legal inferences therefrom.

Again the commission supplemented the stipulated facts as to mill shipments by a finding that such shipments are injected into the channels of interstate commerce and continue in such commerce until delivery to the purchaser, and the inclusion of fixed and uniform prices in the published price lists of the various local associations eliminates price competition in the purchase and sale of these products in interstate commerce. The line of demarcation between interstate commerce and intrastate commerce is not easily defined, nor is it easy to say where the former ends or the latter begins. The question has been many times before the Supreme Court, and it seems there well settled, in tax cases at least, that a sale by a wholesaler or jobber in one state to a purchaser in the same state under circumstances such as are disclosed by this record is not a subject of interstate commerce. Thus, in Ware & Leland v. Mobile County, 209 U. S. 405, 413, 28 S. Ct. 526, 529 (52 L. Ed. 855, 14 Ann. Cas. 1031), the court said:

"When the delivery was upon a contract of sale made by the broker, the seller was at liberty to acquire the cotton in the market where the delivery was required or elsewhere. He did not contract to ship it from one state to the place of delivery in another state. And though it is stipulated that shipments were made from Alabama to the foreign state in some instances, that was not because of any contractual obligation so to do. In neither class of contracts, for sale or purchase, was there necessarily any movement of commodities in interstate traffic, because of the contracts made by the brokers. These contracts are not, therefore, the subjects of interstate commerce, any more than in the insurance cases, where the policies are ordered and delivered in another state than that of the residence and office of the company. The delivery, when one was made, was not because of any contract obliging an interstate shipment, and the fact that the purchaser might thereafter transmit the subject-matter of purchase by means of interstate carriage did not make the contracts as made and executed the subjects of interstate commerce."

So here there were no contractual relations of any kind between the manufacturer and the purchaser from the wholesaler or jobber, and no agreement of any kind between the wholesaler or jobber and the purchaser that the merchandise should be shipped in interstate commerce, or at all. The seller was at liberty to fulfill the contract from merchandise on hand within the state, and adopted the method complained of as a mere matter of convenience, because time and opportunity made delivery in that way feasible and satisfactory. See also, Banker Bros. v. Pennsylvania, 222 U. S. 210, 32 S. Ct. 38, 56 L. Ed. 168, Public Utilities Commission v. Landon, 249 U. S. 236, 39 S. Ct. 268, 63 L. Ed. 577, and Ward Baking Co. v. Federal Trade Commission (C. C. A.) 264 F. 330.

...