State v. P. Lorillard Co.

• Decision Date: 01 May 1923
• Citation: 181 Wis. 347,193 N.W. 613
• Parties: STATE v. P. LORILLARD CO. ET AL.
• Court: Wisconsin Supreme Court

181 Wis. 347

193 N.W. 613

STATE

v.P. LORILLARD CO. ET AL.

Supreme Court of Wisconsin.

May 1, 1923.

Appeal from Circuit Court, Milwaukee County; W. B. Quinlan, Judge.

Action by the State against the P. Lorillard Company and others. From an order overruling demurrers to the complaint, defendants appeal. Reversed and remanded, with directions.

Rosenberry and Eschweiler, JJ., dissenting in part.Olin, Butler, Thomas, Stebbins & Stroud, all of Madison, for appellant P. Lorillard Co.

James T. Drought and Olwell, Durant & Brady, all of Milwaukee, for appellant American Tobacco Co.

Theodore Kronshage, Jr., and Otto Dorner, both of Milwaukee, for appellant Annenberg.

George E. Ballhorn and George H. Katz, both of Milwaukee, for all other defendants.

Herman L. Ekern, Atty. Gen., Daniel H. Grady, Sp. Counsel, of Portage, and George A. Shaughnessy, Dist. Atty., of Milwaukee, for the State.

JONES, J.

This is an appeal from an order overruling defendants' demurrers to the complaint. The complaint alleged:

“1. That the American Tobacco Company is a duly organized corporation existing under and by virtue of the laws of the state of New Jersey, and that on the 18th day of May, 1912, said corporation was duly licensed to do business in the state of Wisconsin, which license is still in effect; that since the 18th day of May, 1912, it has been and now is doing business in the state of Wisconsin and maintains a factory and warehouses in the city of Milwaukee, Milwaukee county, Wisconsin, having agents and salesmen within the state of Wisconsin.

2. That the P. Lorillard Company is a duly organized corporation existing under and by virtue of the laws of the state of New Jersey, and that on the 14th day of December, 1911, the said P. Lorillard Company was duly licensed to do business in the state of Wisconsin, which license is still in effect; that since the 14th day of December, 1911, the said P. Lorillard Company has been and now is doing business in the state of Wisconsin, maintaining a warehouse at Madison, Wisconsin, and having agents and salesmen in this state.”

“3–7. That the Schneider Tobacco Company, Badger Tobacco Company, A. S. Goodrich Company, Lewis–Leidersdorf Company, and Pekarsky Bros. Company are duly organized Wisconsin corporations, existing under and by virtue of the laws of the state of Wisconsin, engaged in the wholesale jobbing business in cigarettes and tobacco, having their principal places of business in Milwaukee, Milwaukee county, Wisconsin.

8–13. That certain persons are engaged in the wholesale jobbing business in cigarettes and tobacco in Milwaukee and surrounding territory, either as individuals or members of copartnerships.

14. That the Association of Wholesale Tobacconists is a corporation purporting to be organized under the laws of the state of Wisconsin, for which articles of incorporation were issued on the 17th day of May, 1920, which organization will be more particularly referred to herein.

15. That the said P. Lorillard Company and the American Tobacco Company were formerly members of a combination in restraint of trade, which attempted to monopolize the tobacco business of the United States, and which was dissolved by a decree of the federal court; that the said P. Lorillard Company and the American Tobacco Company manufacture about 70 per cent. of the tobacco products sold in the state of Wisconsin; that each of said companies has published a certain list price for their products, which list price does not purport to be the price at which the said respective companies shall sell their products, but is a price sought by said companies to be maintained after their products are in other hands in the course of trade.

16. That the tobacco distribution business and the sale of tobacco, other than by manufacturers, is in the hands of jobbers, subjobbers, and retailers; that the jobbers consist of wholesalers, who are placed upon an accredited list of the manufacturers and are permitted to buy direct from the manufacturers; that the subjobbers are wholesalers who are not placed upon the accredited lists of the manufacturers, nor are they permitted by said manufacturers to buy direct from the manufacturers, nor to receive jobbers' discounts; that the retailers, in turn, who sell to the consuming public, are permitted only to buy from said subjobbers or jobbers.

17. That the transactions hereinafter referred to relate solely to intrastate commerce, consisting of sales by jobbers to subjobbers, and sales by jobbers to retailers, or subjobbers to retailers, entirely within the limits of the state of Wisconsin.

18. That the tobacco and cigarettes referred to herein are commodities and articles in general use in this state, and sold generally to the public.

19. That between the 6th day of July, 1921, and the 20th day of October, 1921, in the city of Milwaukee, Milwaukee county, Wisconsin, the defendants above named unlawfully conspired, combined and agreed to prevent competition in the supply and price of tobacco and cigarettes, which articles are in general use in this state, and were intended to be sold herein as a subject of commerce or trade; that said combination and conspiracy did control and fix the price of said articles and commodities, and did illegally restrain commerce and trade within the state of Wisconsin, contrary to the provisions of chapter 458, Laws of 1921.

20. That for the purpose of more easily accomplishing their aims and purposes, the defendants organized and created an association among said defendants for the purpose of regulating prices and controlling competition, establishing rules and regulations; that said association at first was not incorporated, but consisted of a trade association among the wholesale jobbers, but for the purpose of more easily accomplishing their designs, the said jobbers incorporated and formed the Association of Wholesale Tobacconists.

21. That said defendants, conspiring, combining, and agreeing among themselves, with the intention of restraining trade and preventing competition, with the purpose of driving out of business the subjobbers in the city of Milwaukee and the surrounding territory in the state of Wisconsin, did restrain commerce and prevent competition and did control the price of the articles hereinbefore mentioned (a) by refusing to sell to subjobbers other than were on the jobbers' lists; (b) by agreeing not to increase the number of the subjobbers who might buy from the jobbers at subjobbers' rates; (c) by systematically increasing the price at which said subjobbers might purchase tobacco and cigarettes from the jobbers to such an extent that it would be impossible for said subjobbers to do business; (d) by preventing said subjobbers from becoming jobbers and buying supplies from manufacturers direct; (e) by systematically cutting off the supply of tobacco and cigarettes which said subjobbers might purchase, unless the subjobbers became parties to price–fixing and maintenance agreements; (f) by limiting and attempting to limit the persons with which said subjobbers might deal; (g) by collectively threatening the said subjobbers with cutting off their entire supply of tobacco and cigarettes; (h) by collectively threatening to drive the subjobbers out of business unless they agreed to the demands of the said jobbing association.

22. That said defendants further restrained trade and controlled prices by agreeing to fix the price at which tobacco would be sold by members of the jobbing association to retailers outside of the city of Milwaukee and in the state of Wisconsin, and on or about the 1st day of September, 1921, increased the price by collectively refusing discounts at which said tobacco and cigarettes were formerly sold by said jobbers to retailers.

23. That said defendants further fixed prices and controlled the sale of the commodities hereinbefore referred to, and restrained trade by meeting every two weeks at either the Wisconsin Hotel or the Chamber of Commerce Building, at which meetings trade arrangements and understandings were had and made affecting competition and prices, and knowledge communicated to members of the association, with the idea and purpose of eliminating competition between the various members of the association.

24. That said defendants further controlled prices and restrained trade, as hereinbefore alleged, by collectively urging and coercing retailers in the maintenance of certain prices, to the detriment of the consuming public.

25. That said defendants further restrained trade, controlled the price, and eliminated competition, by collectively agreeing and fixing the price at which retailers in the city of Milwaukee might purchase tobacco from said jobbers or subjobbers.

26. That said defendants further restrained trade and competition by threatening subjobbers with the false statement that Liggett & Meyers Company and R. J. Reynolds Company would join with these defendants in cutting off the supply of said subjobbers unless they became parties to this price–fixing combination and agreement and would maintain the price agreed upon.

27. That each of the defendants, respectively, became indebted to the state of Wisconsin, and on the 20th day of October, 1921, were indebted to the state of Wisconsin, in the amount of $5,000, whereby an action accrues according to the provisions of chapter 458, Laws of 1921.

Wherefore the state of Wisconsin demands judgment against each of said defendants in the sum of $5,000, and for such relief as the state may be entitled to in the premises.”

The P. Lorillard Company demurred to the complaint:

“1. For the reason that it appears upon the face thereof that the complaint does not state facts sufficient to constitute a cause of action.

2. And for the reason that it appears upon the face thereof that several causes of action have been improperly united.”

A like demurrer was filed by the American Tobacco Company.

Defendant Schneider Tobacco Company...