State v. Fairbanks-Morse & Co.

• Court: Texas Civil Court of Appeals
• Writing for the Court: BOND; YOUNG; BOND; CRAMER; YOUNG and CRAMER; BOND
• Citation: State v. Fairbanks-Morse & Co., 246 S.W.2d 647 (Tex. Ct. App. 1951)
• Decision Date: 26 October 1951
• Docket Number: FAIRBANKS-MORSE,No. 14401,14401
• Parties: STATE v.& CO. et al.

Page 647

246 S.W.2d 647

STATE v. FAIRBANKS-MORSE & CO. et al.

No. 14401.

Court of Civil Appeals of Texas, Dallas.

Oct. 26, 1951.

On Rehearing Feb. 1, 1952.

Further Rehearing Denied March 7, 1952.

Price Daniel, Att. Gen., Richard H. Cocke, Jr., and Irion, Cain, Bergman & Hickerson, all of Dallas, for appellant.

Allen Wight, John N. Touchstone, John C. Cain, and George Peabody, all of Dallas, Scott, Wilson & Cureton, of Waco, Victor J. Boldin and W. B. Browder, Jr. (of Vinson, Elkins & Weems), and William N. Bonner, of Houston, and Poppenhusen, Johnson, Thompson & Raymond and Anan Raymond, of Chicago, Ill., for appellees.

BOND, Chief Justice.

The State of Texas, by its Attorney General and the District Attorney of Dallas County, instituted this suit against Fairbanks-Morse and Company, an Illinois corporation, Universal Electric Construction Company, an Alabama corporation, H. B. Gieb and Company and its successor, Municipal Engineering and Finance Company, a Texas Corporation, Ballard-Hassett Company, a Delaware corporation, and Albert C. Moore, a resident of Texas, to recover statutory civil penalties for alleged violation of the Anti-Trust Laws of this State (Art. 7426, R.C.S.1925); and to restrain the performance of their combinations, agreements and conspiracy.

Fairbanks-Morse and Company will be hereinafter designated as 'Fairbanks-Morse,' Universal Electric Construction Company as 'Universal Electric,' H. B. Gieb and Company and as successor, Municipal Engineering and Finance Corporation, as 'H. B. Gieb,' Ballard-Hassett Company as 'Ballard-Hassett,' and Albert C. Moore as 'Moore.'

The trial court sustained Fairbanks-Morse's special demurrers to the State's petition and, upon the State's attorneys refusing to amend, dismissed the suit as to all defendants; from which this appeal is prosecuted.

Approaching consideration of the questions here involved, it must be kept in mind that the sufficiency of the pleadings, irrespective of what may be the proof on trial, is the dominant controlling factor, and in passing on the questions presented we are not concerned with the evidence to be offered in support of appellant's contentions.

The plaintiff alleged that about 1938, and subsequent thereto, Fairbanks-Morse was and is engaged in the business of manufacturing and selling Diesel units for the generation of electric current,-power and energy; also was engaged in the business of constructing and installing municipal electric light and power plants in the State of Texas under duly authorized permit from the State; that Universal Electric was and is also engaged in the business of constructing and installing municipal light and power systems in this State; that H. B. Gieb was and is engaged in the business of consulting engineer with respect to the preparation of plans and specifications for the erection of municipal electric light and power systems, and the supervision, construction and installation of such systems in this State; that Ballard-Hassett was and is engaged in the purchase and sale of municipal electric light and power bonds without this State; and that Moore also was a consulting electrical engineer engaged in the preparation of such plans and specifications. The foregoing facts are related in State's petition; and, further, the petition (omitting formal parts) alleges:

'VIII. Plaintiff alleges that sometime about 1938 the exact date being unknown to the plaintiff, but well known to the defendants, the defendants, Fairbanks-Morse, H. B. Gieb and Albert C. Moore did combine their capital, skill or acts to create, or which tended to create, or carry out restrictions in trade or aids to commerce and to create and carry out restrictions in the free pursuit of the business of the construction and installation of municipal electric light and power systems in the State of Texas and did, pursuant to such combination, enter into an agreement or understanding whereby it was agreed that the said Fairbanks-Morse would promote the sale and installation of municipal electric light and power systems in various towns within the State of Texas. That it was of the essence of said combination, agreement or understanding that the promotion of such electric light and power systems would be done only in the smaller towns of this State, and especially in those towns which did not employ municipal engineers which were qualified to prepare plans and specifications for municipal electric light and power systems or who were qualified to supervise the construction thereof, that as a part of said combination, agreement or understanding and in furtherance thereof, Fairbanks-Morse Company agreed to sell the governing bodies of such cities upon the advantages of owning and operating a municipal electric light and power system and that as a part of the promotion of such systems Fairbanks-Morse Company agreed to induce such towns to employ as consulting engineers the defendants H. B. Gieb or Albert C. Moore, and that the said H. B. Gieb and Albert C. Moore agreed that as their contribution to said combination, agreement or understanding, they would prepare plans and specifications for municipal electric light and power systems in the cities in which they were employed and that in the preparation of such plans and specifications the same would be so drafted as to prevent or lessen the competition on the bidding on such construction and installation and in such manner that only Fairbanks-Morse could competitively bid its type of machinery, engines and equipment and so that only Fairbanks-Morse could bid on the construction and installation of municipal electric light and power systems; that such plans and specifications were to be prepared by the said H. B. Gieb and Albert C. Moore so as to effectively prevent or lessen competition and to create and carry out restrictions in the free pursuit of the business of the construction and installation of municipal electric light and power systems together with the equipment and material used therein, and especially with regard to the Diesel units required for such systems. That as a part of such combination, understanding or agreement, the said Albert C. Moore and H. B. Gieb were to place in such plans and specifications certain base bids on the Diesel units necessary therefore, along with certain alternate bids. In both base and alternate bids, maximum piston travel speed was to be limited to conjunction with maximum permitted mean effective pressures, operating rotative speeds, fuel consumption and operating water temperatures of the respective units in a manner as to permit Fairbanks-Morse to bid on both base and alternate units while at the same time effectively preventing or lessening the number of competitive manufacturers of Diesel engine units who could bid on an equal basis. In both base and alternate bids, the mechanical design and method of operation of such units such as the fuel injection, type of governor, method of crank case scavenging, alloy type and carbon content of steel used, fabrication, including the prohibition of certain 4-cycle engines were to be so limited by the plans and specifications to permit Fairbanks-Morse to bid on both base and alternate units while at the same time effectively preventing or lessening the number of competitive manufacturers who could bid on an equal basis. That by reason thereof, not only was Fairbanks-Morse placed in a more favored position with regard to the Diesel units required for such systems, but such combination, agreement and understanding was made for the further purpose and did have the further effect of effectively eliminating or lessening competition in the business of the construction and installation of municipal electric light and power systems for the reason that the construction division of the defendant, Fairbanks-Morse alone, could submit bids which could qualify under such plans and specifications with reference to the Diesel units necessary and required in such systems.

'VIII. Plaintiff alleges that after the formation of such combinations, agreements or understandings above alleged and pursuant thereto, the said H. B. Gieb was employed and did prepare plans and specifications for the cities of San Augustine, Sanger, Garland, Crosbyton and Seymour, and the said Albert C. Moore was employed and did prepare plans and specifications for the cities of Weatherford, Baird and Sonora; that pursuant to such combination, agreement and understanding, said plans and specifications in each respective city contained the provisions alleged in paragraph VII thereof, and by virtue thereof, did in truth and in fact effectively prevent or lessen competition and tended to create and carry out restrictions in the free pursuit of the business of the construction and installation of municipal electric light and power systems.

'IX. Plaintiff further alleges that in the preparation of such plans and specifications by the said H. B. Gieb and Albert C. Moore as above alleged, said defendants were, at all times material hereto in truth and in fact, but carrying out their part and portion of said combination, understanding and agreement, above alleged, and were at all times material hereto acting as a member of such combination, understanding and agreement while at the same time holding themselves out to said cities and representing to said cities that they were acting for and on behalf of said cities.

'X. Plaintiff further alleges that the combinations, agreements and understandings hereinbefore alleged between Fairbanks-Morse, H. B. Gieb and Albert C. Moore continued until about 1940, the exact date of which is unknown to plaintiff but is well known to the defendants, at which time the defendants, Universal Electric and Ballard-Hassett were and did become a part of and joined said combination, agreement or understanding and the same was expanded by additional agreements and understandings as hereinafter alleged, so as to not...