State ex rel. Lesh v. Indiana Mfrs. of Dairy Prods.

• Decision Date: 12 October 1926
• Docket Number: No. 25303.,25303.
• Citation: 198 Ind. 288,153 N.E. 499
• Parties: STATE ex rel. LESH, Atty. Gen., v. INDIANA MFRS. OF DAIRY PRODUCTS et al.
• Court: Indiana Supreme Court

198 Ind. 288

153 N.E. 499

STATE ex rel. LESH, Atty. Gen.,

v.INDIANA MFRS. OF DAIRY PRODUCTS et al.

No. 25303.

Supreme Court of Indiana.

Oct. 12, 1926.

Appeal from Superior Court, Marion County; Linn D. Hay, Judge.

Action by the State, on the relation of Ulysses S. Lesh, Attorney General, against the Indiana Manufacturers of Dairy Products and others. Judgment for defendants, and plaintiff appeals. Affirmed.

Superseding opinion of Appellate Court, 144 N. E. 423.U. S. Lesh, Atty. Gen., and Wm. P. Evans, of Indianapolis, for appellant.

Mark H. Miller, Miller, Dailey & Thompson, Albert L. Rabb, Thos. D. Stevenson, and Perry E. O'Neal, all of Indianapolis for appellees.

PER CURIAM.

The relator brought this action in the name of the state, on his relation, against the first named appellee, a corporation organized under the Voluntary Association Act (section 4857 et seq., Burns' 1926; chapter 127, Acts 1901, p. 289), and the persons, partnerships, and corporations who were members of the association, to enjoin them from carrying on an alleged conspiracy and from doing certain alleged unlawful acts, and to forfeit the charters of the first named corporation and of its several members that were corporations. The trial court made a special finding on which it stated a conclusion that the law was with the defendants and that the plaintiff was not entitled to recover anything, and rendered judgment accordingly. Appellant has assigned as error that the court erred in its conclusion of law upon the facts found, and in overruling the motion for a new trial

[1] The only issue submitted for trial was formed upon an answer of general denial to an amended complaint which, in substance, alleged: That in December, 1917, the Indiana Manufacturers of Dairy Products had been incorporated as a voluntary association, not for pecuniary profit, but for the declared purpose of associating together all persons, firms, and corporations interested in the manufacture of dairy products, to aid in the development of all branches of the dairy industry, to uphold and aid in enforcing the laws of Indiana relating to the dairy products industry in said state, and to protect its members in the transaction of their business and the farmers of the state from anything that would disrupt, discourage, or burden the dairy industry, and to devise methods and provide means of developing the dairy industry, and to encourage an increased production of milk and the raising of more profitable cows. That certain of the defendants were domestic corporations for the purpose of buying and selling milk and cream and making butter, ice cream, and other milk products, and certain individual defendants constituted partnerships as stated, engaged in the same business, and all of them were engaged in business at places within the state of Indiana, as set out, and all of them were members of the Indiana Manufacturers of Dairy Products. That at an unnamed time prior to January 1, 1921, the defendants entered into a combination and conspiracy in restraint of trade and commerce for the purpose of creating and carrying out restrictions in the production, distribution, and sale of milk and milk products (as enumerated), and to limit and reduce the production of said articles, and to increase or reduce the price thereof, as their selfish interests might be thereby served, and to suppress and prevent competition as between themselves and others doing business within the territory wherein they operated, which was alleged to cover practically the entire state. That in furtherance of said combination and conspiracy the defendants made a plan which they executed by organizing the members of the Indiana Manufacturers of Dairy Products into three divisions, as the “butter manufacturers,” the “ice cream manufacturers,” and the “milk dealers,” each with its separate officers and committees, and all tied together with general officers and committees, with main offices of the general organization in the city of Indianapolis.” And that they had, in addition to such officers and an “executive committee” of the main organization, and of each division organization, various departmental committees of “ways and means,” “adjustment and arbitration,” “publicity,” “legislative,” and “rates and transportation,” each of which had powers and duties not specified in the complaint. Also, that “by the combined power and concerted action of the several defendants they are able to and in fact do arbitrarily control in a substantial and hurtful way the milk, butter, ice cream, and allied milk products in this state. That they are able to and in fact do arbitrarily control and dictate the price to be paid to the producers of milk and cream, and are and have been maintaining an unreasonable and unconscionable low level of prices to the producer. *** They are able to and in fact do arbitrarily control and dictate the price to be paid the consumer of milk and cream, *** butter, and other milk products, *** (and) ice cream, and are and have been maintaining an unreasonable and unconscionable high level of prices to consumers. That they are able to and in fact do arbitrarily control and regulate the quality of milk and milk products as delivered to the consumers thereof, and they tolerate and foster inferior and adulterated qualities thereof.” That “in order to finance its variant and devious pernicious activities,” the association collects from its members dues in proportion to the business done, “by which method they are able to collect not only a large “slush fund,” but also obtain useful data properly to gage the business activities of the several members and keep them in propor line as amongst themselves, as well as to control their relation to others.” That the articles in which defendants are dealing are necessaries of life and are essential articles of trade and commerce, and said acts have “a blighting effect” upon producers deprived of fair profits for milk and cream, and upon consumers unable to pay the high prices exacted for defendants' said products. And that enforcement of the penal sections of the statute is inadequate to give relief without resort to equity.

Under the issue joined upon such complaint and the answer of denial the appellant, as plaintiff, had the burden to establish the facts so alleged, or enough of them, at least, to constitute the alleged cause of action; and to do this it must affirmatively establish that an agreement had been made between some of the defendants, at least to do acts or to accomplish a purpose forbidden by law. Sections 4651, 4652, Burns' 1926; sections 3866, 3867, Burns' 1914; sections 1 and 2, c. 243, Acts 1907, P. 490; 5 Ruling Case Law, § 5, p. 1065.

[2] But by its special finding of facts the trial court did not find that any combination or conspiracy existed or had ever been formed, or that any of the defendants ever had agreed with each other to do anything unlawful. On the contrary, the finding No. 9 stated that “the Indiana Manufacturers of Dairy Products never entered into a scheme, design, understanding, combination or conspiracy in the form of a trust or in restraint of trade and commerce with the defendants or any of them or anybody” for either or any of the purposes alleged, quoting the language of the complaint and expressly negativing it. And while some of the recitals of this finding may possibly state mere conclusions, it clearly and obviously fails to find the existence of the conspiracy which plaintiff had alleged and had the burden of proving, as charged in the complaint. Neither did the special finding even mention the subject of any attempt, or intention on the part of anybody to attempt, to limit, restrict, or reduce the production, distribution, or sale of milk or milk products, or to control them in any way, except only that it recited that neither the defendants nor any of them were able to or did arbitrarily control or ever had combined to control the same. And if it be admitted, as appellant insists, that some parts of that finding stated conclusions and not facts, at least it wholly failed to find facts establishing what appellant had alleged and was bound to prove to the effect that the defendants, in combination, were able to and did exercise such control. There was no finding that the prices paid to any producer were low, or that those paid by any consumer or received by any manufacturer were high, at any time, whether by reason of the acts or influence of the defendants or otherwise. The court found nothing at all as to prices. Neither was there any finding that inferior and adulterated products were marketed. There was no finding that a “slush fund” was being or had been collected, or that any money had been collected or used for any unlawful purpose, but the court expressly found that the money received by the defendant association was used to pay the salary of its secretary, rent, stenographic services, office supplies, postage, and other similar and legitimate expenses, and also found that the association really was organized for the lawful purposes stated in its articles of association as set out in the complaint.

But notwithstanding there was no finding that a conspiracy existed or...