State v. Blyth
| Decision Date | 19 February 1975 |
| Docket Number | Nos. 55974,56784,s. 55974 |
| Parties | 1975-1 Trade Cases P 60,177 STATE of Iowa, Appellee, v. Paul BLYTH et al., Appellants. STATE of Iowa, Appellee, v. Ralph BAUER et al., Appellants. |
| Court | Iowa Supreme Court |
James A. Brewer, Ames, Eugene Davis and David J. Grace, Des Moines, for appellants.
Richard C. Turner, Asst. Atty. Gen., Gary H. Swanson, William R. Stengel, Jr., and John D. Hudson, Asst. Attys. Gen., for appellee.
Heard en banc.
These two appeals by individual and corporate defendants from judgments imposed following their conviction by a jury of violating section 553.1, The Code, have been consolidated for review in this court. Their trials had followed indictment by a Story County grand jury accusing 74 International Harvester dealers throughout Iowa of violating this statute by entering into a agreement to fix prices of International Harvester parts.
Appellants are some of the 142 corporations and individuals originally indicted. A number of others had been dismissed on pretrial motions. Other motions attacking the indictment and statute were overruled. These rulings give rise to the first four issues stated by appellants for review.
There were three jury trials. In the first ten individuals and six corporations were tried and convicted. They are the appellants in number 55974. Following the first trial plea bargaining resulted in certain defendants entering pleas of guilty and dismissal of indictments as to others.
None of the defendants were convicted in the second trial, there being one directed verdict, six not guilty verdicts and a hung jury as to nine defendants.
In the third trial 13 individuals and four corporations were tried. Eight were acquitted, three had a hung jury and six were convicted. The trial court ordered a dismissal as to one of those convicted and another has died. The remaining four are appellants in cause number 56784.
Contentions of appellants in both cases relating to the trial court's refusal to sustain defendants' motion for directed verdict, its rulings on evidence adverse to defendants and alleged errors in the court's instructions give rise to the three remaining issues presented for review by these appeals.
At the time of the first trial there were approximately 154 International Harvester dealers in Iowa. Some International Harvester dealers sell both trucks and farm equipment machines while others sell only farm equipment. All dealers sell parts for equipment.
International Harvester Company prepares and distributes to its dealers various price books for the sale of repair or replacement parts which it revises twice yearly. The red book (201 series) covers farm machine equipment parts. The green book (300 series) covers parts for trucks, tractors, engines and construction equipment. Together they contain about 300,000 parts. There are various columns in these books providing different price ranges but each dealer is free to set his own retail price. The International book has this statement: 'Dealers or distributors using this list are advised that the prices contained herein are not intended, nor should they be interpreted, to be determinative of the resale prices of such dealers or distributors.'
In addition to these price books International offers to its dealers for a price a computer service which is referred to in the record as a service part inventory management. A subscriber to this service may dictate to the computer a price level higher than the list price in International's suggested price books without objection from the company. The service is described as very expensive.
Prior to 1969 certain discounts were available to the dealers in connection with their purchases from International including a 2.5 percent volume discount, a two percent cash discount, a special item discount and what is referred to in the record as CT discount described as an incentive rebate on classified trade parts.
The incentive rebate discounts were terminated effective January 1, 1971. Cash discounts had already been eliminated and in 1970 the volume discount was discontinued.
The record discloses that starting in about 1966 International Harvester Corporation had sponsored 'Dealer Council' meetings for motor truck dealers. The dealers would elect representatives and formulate an agenda. The representatives would then go to Chicago for meetings with company officials at which time they would present the dealers' points of view on various problems.
Some 10 to 12 farm equipment dealers within a 60-mile radius of Emmetsburg in northwestern Iowa had been attending meetings for about seven years before the indictment. Although this group had no organizational structure the dealers met to exchange views, equipment lists and discuss general problems. After the discounts previously mentioned had been eliminated, this group felt it would be a good idea to have a state-wide setup in the farm equipment end of the business similar to that instituted among motor truck dealers.
In order to find out what were the important problems common to the farm equipment dealers as a whole a questionnaire was sent to the dealers in the northwestern Iowa group. These questionnaires were returned to the Estherville Implement Company and tabulated. Evidently, later the questionnaire was sent to all dealers in Iowa.
Shortly thereafter International Harvester Company called a dealer council meeting to be held in Des Moines during January 1971. This council included district offices in eight or ten midwestern states with three dealer representatives from each state. Earlier in January a number of implement dealers in the state of Iowa met at Ames to set up an agenda for the three people who were to serve on the dealer council to discuss with the International Harvester personnel at the meeting to be held later that month in Des Moines. One of the topics discussed at that meeting concerned parts margins. March 30 a meeting of dealers was held in Ames for the purpose of reporting to the dealers what the International personnel had to say at the Des Moines meeting in regard to price margins and other items as well.
In the discussion following the report it developed many dealers were pricing their repair and replacement parts at levels other than those which were in the International Harvester parts price books. The mechanics of figuring prices in this manner was discussed and said to be cumbersome. The possibility of securing a parts price book which would make calculation easier was brought before the group.
Mr. Hendrickson, one of the defendants, stated he knew some dealers in Minnesota who had investigated the possibility of developing veloping such a price book. It was decided Hendrickson would check his source of information to find out more about this project since the cost of such a publication was a matter of concern.
An employee of another dealer mentioned that his company which also had a Ford farm equipment dealership had for many years purchased parts price books from a printer containing a markup of 10 percent over the prices suggested by Ford.
Following this meeting Jack Harms, another defendant, contacted a printer from Huron, South Dakota, about the probable cost of printing revised price parts books. He received a quotation from this printer that he could print such revised books, with a 10 percent increase over that shown in Harvester Company books, for an estimated $10,000 for one book explaining the additional cost for printing 100 such books would be the price of the paper or approximately two to three dollars per book.
After receiving this information it was decided an inquiry should be conducted to determine whether enough dealers would be interested in buying such a book to make the project feasible. In this connection Harms sent a letter to one dealer in each zone throughout the state explaining the cost of printing. The zone representatives were asked to contact the dealers in their zone to see if any would be interested in ordering a book. If so, they were to send their check for $100 payable to IH Dealer Council to Harms at Everly. This cost was based upon an anticipated order of 100 books. There was also a $10 fee for postage and expenses.
Eventually, about 75 Iowa dealers purchased the revised books which became available in July. Many were distributed July 14, 1971, at a second Ames meeting which had come to the attention of the attorney general's office. State agents were present and observed the distribution. There were also regional zone meetings at Red Oak, Harlan and Winterset where further distribution was made to those dealers who had paid the $100.
Further investigation by state agents led to the matter being brought to the attention of the grand jury.
The first person named in the indictment was Jack Harms and in the three trials mentioned and in these two appeals the case has carried the caption, 'State of Iowa v. Jack Harms, et al.' However, pursuant to a court order the indictment was amended so as to place the names of defendants in alphabetical order. Defendants are listed in the same manner in the caption of this opinion.
The body of the indictment as it appears in the record is in these words:
'THE GRAND JURORS of the County of STORY in the name and by the authority of the State of Iowa accuse * * * (the individual and corporate defendants as named in the first amendment) of the crime of conspiracy in violation of Section 553.1, Code of Iowa, 1971, and charge that the above named persons and corporations did, between about January 1, 1971 and August 31, 1971, create, enter into, and become members of, parties to and partners in an agreement, combination, confederation and understanding among themselves and with each other to regulate and fix the prices of International Harvester parts sold in this state.'
The statute referred to provides:
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