Refrigeration Sales Co. v. York Corp.
| Decision Date | 21 November 1961 |
| Parties | REFRIGERATION SALES CO., INC. v. YORK CORPORATION, York Corporation of Delaware and M. Sidney Lebair. |
| Court | New York Supreme Court |
Harold H. Boxer, New York City, for plaintiff.
Jaffin, Schneider, Kimmel & Galpeer, New York City, for defendants.
In an action based upon fraud and breach of contract the defendants move pursuant to Rule 111, Rules of Civil Practice, to dismiss plaintiff's affirmative defense to defendants' counterclaim for goods sold and delivered. In substance the affirmative defense alleges that defendants violated the anti-trust laws of the United States by entering into contracts in restraint of trade, illegally fixing prices by controlling the resale prices of its products, prohibiting resale of its products in certain designated territories and to certain governmental agencies, and by threatening to cut off plaintiff's supplies if plaintiff violated the resale restrictions.
The corporate defendants are in the refrigeration and airconditioning industry. They undertook to sell to plaintiff their merchandise at prices listed in their price list less agreed discounts and granted to plaintiff a territory in which plaintiff had the exclusive right to sell, solicit and distribute the said merchandise. As part of the agreement, plaintiff agreed to provide the defendant with information concerning prospective customers and to disclose to defendants any and all relevant matters and records pertaining to plaintiff's business including inventory, personnel, financial condition, customers, sales promotion, advertising or other pertinent information regarding the plaintiff's business which might be required by the said corporate defendants. It is asserted that the corporate defendants thereafter together with the individual defendant, conspired to fix prices, for the merchandise in certain designated territories and with respect to sales to governmental agencies; that to carry out such conspiracy the corporate defendants as a condition to the delivery of the goods referred to in the counterclaim required plaintiff to abstain and refrain from offering the said goods at prices other than that fixed by the defendants and to abstain from selling the said goods in certain territories which the corporate defendants set aside as the exclusive territories for others, and to abstain from offering the goods for sale to certain governmental agencies and subdivisions thereof; that such requirements were placed upon plaintiff under the threat that if plaintiff violated them plaintiff's distributorship rights would be canceled.
The Supreme Court of the United States, in actions to recover from the purchaser the agreed price of goods sold, has time and time again refused to permit the purchaser to escape his obligations by asserting a defense of illegality under the Federal anti-trust laws (see Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 22 S.Ct. 431, 46 L.Ed. 679; Cincinnati, P. B. S. & P. Packet Co. v. Bay, 200 U.S. 179, 26 S.Ct. 208, 50 L.Ed. 428; D. R. Wilder Mfg. Co. v. Corn Products Refining Co., 236 U.S. 165, 35 S.Ct. 398, 59 L.Ed. 520; A. B. Small Co. v. Lamborn & Co., 267 U.S. 248, 45 S.Ct. 300, 69 L.Ed. 597) since the violation was collateral to the right asserted in the litigation and the relationship between the contract of purchase and the transgression of the anti-trust laws was too remote. However in Continental Wall Paper Co. v. Louis Voight & Sons (212 U.S. 227, 29 S.Ct. 280, 53 L.Ed. 486) the court reached a different result. There the defendant purchased merchandise from plaintiff which was the instrument whereby a scheme by thirty manufacturers to monopolize trade and enhance the price of the merchandise was furthered.
The defendant was compelled to become a party to the illegal combination or go out of business and the account in suit was made up, as to prices and...
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