State on Information of Dalton v. Miles Laboratories, No. 42152

CourtUnited States State Supreme Court of Missouri
Writing for the CourtSTONE; All concur, except EAGER
Citation282 S.W.2d 564,365 Mo. 350
PartiesSTATE of Missouri, on the Information of John M. DALTON, Attorney-General, Relator, v. MILES LABORATORIES, Inc., McKesson and Robbins, Inc., McPike Drug Company, a corporation, McPike, Inc., C. D. Smith Drug Company, a corporation, St. Louis Wholesale Drug Company, a corporation, and Meyer Bros. Drug Company, a corporation, Respondents.
Decision Date10 October 1955
Docket NumberNo. 42152

Page 564

282 S.W.2d 564
365 Mo. 350
STATE of Missouri, on the Information of John M. DALTON,
Attorney-General, Relator,
v.
MILES LABORATORIES, Inc., McKesson and Robbins, Inc., McPike
Drug Company, a corporation, McPike, Inc., C. D. Smith Drug
Company, a corporation, St. Louis Wholesale Drug Company, a
corporation, and Meyer Bros. Drug Company, a corporation, Respondents.
No. 42152.
Supreme Court of Missouri, En Banc.
Oct. 10, 1955.

[365 Mo. 351]

Page 566

John M. Dalton, Atty. Gen., Robert R. Welborn, Asst. Atty. Gen., for relator.

[365 Mo. 354] Verne G. Cawley, Elkart, Ind., James C. Wilson, Colvin A. Peterson, Jr., Kansas City, for respondent Miles Laboratories, Inc., of counsel, Cawley, Happer, Slabaugh & Byron, Elkart, Ind., Watson, Ess, Whittaker, Marshall & Enggas, Kansas City.

James M. Douglas, Thompson, Mitchell, Thompson & Douglas, St. Louis, for McKesson and Robbins, Inc., St. Louis Wholesale Drug Co., and Meyer Bros. Drug Co.

Kenneth E. Midgley, Blackmar, Newkirk, Eager, Swanson & Midgley, Kansas City, for McPike Drug Co.

Robert A. Brown, Jr., Brown, Douglas & Brown, St. Joseph, for C. D. Smith Drug Co.

[365 Mo. 355] STONE, Special Judge.

This original proceeding in quo warranto was instituted by the filing on June 29, 1950, of an information charging seven corporate respondents with violations of the Missouri anti-trust statutes. Sections 416.010 to 416.040, incl. (All statutory references herein are to RSMo 1949, V.A.M.S.) After the [365 Mo. 356] filing of separate answers by respondents, an order was entered on

Page 567

November 13, 1950, appointing Lyman Field, Esq., as special commissioner to take evidence upon the issues joined and to report the evidence thus taken, together with his findings of fact and conclusions of law. Following extended hearings, our commissioner filed his report on September 8, 1953, in which he concluded that none of the respondents had violated the Missouri anti-trust statutes as charged in the information. The Attorney-General (hereinafter referred to as relator) excepts to the commissioner's findings and conclusions only as to Miles Laboratories, Inc. (hereinafter referred to as Miles).

Miles is an Indiana corporation duly registered and qualified to do business in Missouri, which manufactures and sells throughout the United States several brand-name proprietary medicines. However, the evidence was confined, almost entirely, to distribution and sale of a single product, Alka-Seltzer, which, during the period under consideration, i.e., three years prior to June 29, 1950, 1 was distributed by Miles in Missouri in three ways, to-wit, (1) by sales to retailers through nine drug wholesalers (including the other six respondents in this case, hereinafter referred to as the other respondents), who were appointed by Miles as del credere factors, (2) by direct sales to approximately one hundred thirty other wholesalers in Missouri, and (3) by direct sales to approximately seventy-five large retailers, including Katz Drug Company, operating a chain of drug stores in Kansas City and elsewhere, and (prior to May, 1949) Milgram Food Stores, Inc., operating a chain of grocery supermarkets in Kansas City. With each of the nine drug wholesalers in Missouri (as well as drug wholesalers throughout the nation) who were appointed as del credere factors, Miles entered into a written consignment agreement providing, among other things, that Miles would furnish a consigned stock of its products to the factor, that Miles reserved the right to designate the purchasers from whom the factor should or should not solicit orders for the consigned Miles products and reserved absolute title to such products until delivery to the purchasers thereof, that the factor would fill orders only at stated prices and discounts and would remit promptly to Miles the proceeds of sales of Miles products less the factor's commission, and that the factor would 'not enter into any contract under the fair trade laws or otherwise suggest the prices at which any purchaser of said products shall resell the same.' Noting that relator had conceded his inability to find any Missouri case indicating that such consignment agreements violate our anti-trust statutes, and pointing out that the [365 Mo. 357] relationship between Miles and its factors was that of principal and agent [State ex rel. Parker v. Thompson, 120 Mo. 12, 20, 25 S.W. 346, 348] and that the factors' guaranty of payment for Miles products sold through them did not affect that relationship [Suman v. Inman, 6 Mo.App. 384], our commissioner properly concluded that the evidence as to the other respondents, limited as it was to proof of execution of the consignment agreements and dealings in strict accordance therewith, was wholly insufficient to justify a finding against those respondents.

We turn to the issue as to Miles. The information closely follows the language of Sections 416.010 to 416.040, incl., 2

Page 568

and in general terms charges violations of each of those statutes. However, the gravamen of relator's charge is that Miles was guilty of so-called vertical price-fixing, i. e., the fixing and maintenance of resale prices; and, the determinative question here are (1) whether Miles entered into any arrangement, agreement or understanding to fix or maintain the resale price of Alka-Seltzer or to lessen full and free competition in the sale thereof and (2) if so, whether such action violated the Missouri anti-trust statutes. Having found that 'no price-fixing agreements were shown or proved by the evidence,' our commissioner deemed it unnecessary to rule the second question. Although a commissioner's findings may be persuasive [State ex inf. Barker v. Armour Packing Co., 265 Mo. 121, 144, 176 S.W. 382, 387], '(t)he case is here for our weighing upon the law, and for our examination upon the evidence, as we may find it to be from the record' [State ex [365 Mo. 358] inf. Attorney General v. Arkansas Lumber Co., 260 Mo. 212, 274-275, 169 S.W. 145, 164-165] and the ultimate responsibility for determination of both issues of fact and questions of law rests upon us.

As readily acknowledged by its President, Mr. Walter R. Beardsley, Miles has 'strongly advocated' and supported fair trade legislation throughout the nation and has been a leader in procuring enactment of such legislation in forty-five states, Missouri being one of only three states which does not have a fair trade act. (The other two are Texas and Vermont.) Since 1934, Miles has followed consistently the policy of refusing to sell Alka-Seltzer to those who do not maintain the suggested minimum retail prices of 49cents for the '60cents size' and 24cents for the '30cents size.' Lists showing Miles' suggested minimum retail prices for all of its products have been publish and distributed to both wholesalers and retailers, and its salesmen, such as Jacob Raca, Jr., who traveled the northern half of Missouri (including Kansas City) during the period under consideration here, have been instructed to check advertised and 'shelf' prices on Miles products and to report any 'price violations' to their superiors promptly. It is apparent from the record that Miles' price maintenance policy has become well known in the drug industry. As stated by Mr. Morris R. Shlensky, Executive Vice-President and General Manager of Katz, Miles is one of the 'very few' drug suppliers 'who are sincere about * * * adherence to suggested minimum prices' and 'are really severe in their policing of their (price) policy.'

Shortly after Milgram began to handle drug items about 1940, a sales representative of Miles, Stair by name, called on John W. Mabry, then manager of Milgram's drug department, and 'talked about their suggested price.' Mabry told Stair that 'we will try to go along' with Miles' price maintenance policy and, as Mabry construed it, he 'made a promise' that 'we would get their (Miles) suggested prices.' So long as Mabry continued as manager of its drug department, Milgram did maintain Miles' suggested minimum retail prices, except for one brief reduction (subsequently

Page 569

discussed with a Miles representative) to meet a price advertised by a local competitor who 'made a mistake.' When Mabry was transferred to another department and Sheldon Levine became manager of Milgram's drug department about 1946, Mabry told Levine (to use Mabry's language) 'that I agreed to kind of go along with their (Miles) policy of suggested retail prices' or (to use Levine's language) 'that he (Mabry) had agreed to maintain that price with Miles'; and, Miles' suggested minimum retail prices were respected and maintained until March, 1949, when Levine 'thought it was good business' to cut the price of Alka-Seltzer and advertised the '60cents size' first for 39cents and later for 35cents.

In May, 1949, Maurice Blond, Katz' merchandise manager, called Perry L. Shupert, Miles' sales manager, at Miles' home office in Elkhart,[365 Mo. 359] Indiana, and told Shupert that Katz 'no longer could ignore' Milgram's advertised prices on Alka-Seltzer and intended to meet competition. Shupert 'requested that we do nothing about meeting competitive situations.' Within a few days, Kendall McKee, Miles' division sales manager from Chicago, and Raca, Miles' local representative, conferred personally with Katz' Shlensky and Blond, who again urged that 'we should be allowed to go along and meet the competitive situation' created by Milgram's advertised prices. McKee 'requested that we not go ahead'; and, after Katz' Shlensky had talked over long distance with Beardsley, Miles' president, Katz decided to maintain Miles' suggested prices on Alka-Seltzer for the time being.

Levine, Milgram's drug manager, having refused Shupert's telephonic request and McKee's personal request to raise Milgram's retail price on Alka-Seltzer to Miles' suggested minimum, Miles' Shupert wrote Raca, Miles' local representative, on May 13, 1949,...

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29 practice notes
  • Gaddy v. State Bd. of Registration for Healing Arts, No. 8481
    • United States
    • Court of Appeal of Missouri (US)
    • November 23, 1965
    ...State ex rel. Lentine v. State Board of Health, supra, 334 Mo. at 235, 65 S.W.2d at 950(9); State on Inf. of Dalton v. Miles Laboratories, 365 Mo. 350, 365, 282 S.W.2d 564, 574(14); Co-Operative Live Stock Com'n. Co. v. Browning, 260 Mo. 324, 344, 168 S.W. 934, 938(2); State ex rel. Laundry......
  • Brawner v. Brawner, No. 46319
    • United States
    • United States State Supreme Court of Missouri
    • September 14, 1959
    ...certiorari denied Jackson Co. v. Reed, 311 U.S. 716, 61 S.Ct. 397, 85 L.Ed. 466; State on Inf. of Dalton v. Miles Laboratories, Inc., 365 Mo. 350, 282 S.W.2d 564, 574(15); State ex rel. Spink v. Kemp, 365 Mo. 368, 283 S.W.2d 502, 529(40). The general assembly has legislated extensively with......
  • Superior Loan Corp. of Buffalo v. Robie, No. 9074
    • United States
    • Missouri Court of Appeals
    • January 25, 1972
    ...be read in the light of the facts in that particular case (State on Inf. of Dalton v. Miles Laboratories, 365 Mo. (banc) 350, 364, 282 S.W.2d 564, 573(12), and cases there cited), and find none of them persuasive on the facts presented by the record before us. Although we note marginally an......
  • Odum v. Cejas, No. 9258
    • United States
    • Missouri Court of Appeals
    • May 17, 1974
    ...reported opinion should be read in the light of the facts of that particular case (State on Inf. of Dalton v. Miles Laboratories, Inc., 365 Mo. 350, 364, 282 S.W.2d 564, 573(12) (banc 1955); Citizens State Bank of Nevada v. Wales, 469 S.W.2d 750, 758(6) (Mo.App.1971)), we are satisfied that......
  • Request a trial to view additional results
29 cases
  • Gaddy v. State Bd. of Registration for Healing Arts, No. 8481
    • United States
    • Court of Appeal of Missouri (US)
    • November 23, 1965
    ...State ex rel. Lentine v. State Board of Health, supra, 334 Mo. at 235, 65 S.W.2d at 950(9); State on Inf. of Dalton v. Miles Laboratories, 365 Mo. 350, 365, 282 S.W.2d 564, 574(14); Co-Operative Live Stock Com'n. Co. v. Browning, 260 Mo. 324, 344, 168 S.W. 934, 938(2); State ex rel. Laundry......
  • Brawner v. Brawner, No. 46319
    • United States
    • United States State Supreme Court of Missouri
    • September 14, 1959
    ...certiorari denied Jackson Co. v. Reed, 311 U.S. 716, 61 S.Ct. 397, 85 L.Ed. 466; State on Inf. of Dalton v. Miles Laboratories, Inc., 365 Mo. 350, 282 S.W.2d 564, 574(15); State ex rel. Spink v. Kemp, 365 Mo. 368, 283 S.W.2d 502, 529(40). The general assembly has legislated extensively with......
  • Superior Loan Corp. of Buffalo v. Robie, No. 9074
    • United States
    • Missouri Court of Appeals
    • January 25, 1972
    ...be read in the light of the facts in that particular case (State on Inf. of Dalton v. Miles Laboratories, 365 Mo. (banc) 350, 364, 282 S.W.2d 564, 573(12), and cases there cited), and find none of them persuasive on the facts presented by the record before us. Although we note marginally an......
  • Odum v. Cejas, No. 9258
    • United States
    • Missouri Court of Appeals
    • May 17, 1974
    ...reported opinion should be read in the light of the facts of that particular case (State on Inf. of Dalton v. Miles Laboratories, Inc., 365 Mo. 350, 364, 282 S.W.2d 564, 573(12) (banc 1955); Citizens State Bank of Nevada v. Wales, 469 S.W.2d 750, 758(6) (Mo.App.1971)), we are satisfied that......
  • Request a trial to view additional results
1 books & journal articles
  • Missouri. Practice Text
    • United States
    • ABA Antitrust Library State Antitrust Practice and Statutes (FIFTH). Volume II
    • December 9, 2014
    ...rule of reason, and are no longer considered illegal per se under federal law. 46 40. See, e.g. , State ex inf. Dalton v. Miles Labs., 282 S.W.2d 564, 574 (Mo. banc 1955) (ruling that “there is no escape from the conclusion that vertical agreements or understandings for fixing or maintainin......

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