State v. Racine Sattley Co.

• Citation: 134 S.W. 400
• Parties: STATE v. RACINE SATTLEY CO.
• Decision Date: 25 January 1911
• Court: Court of Appeals of Texas

134 S.W. 400

STATE v. RACINE SATTLEY CO.

Court of Civil Appeals of Texas.

January 25, 1911.

Appeal from District Court, McLennan County; Marshall Surratt, Judge.

Action by the State against the Racine Sattley Company. From a judgment for defendant, plaintiff appeals. Reversed and remanded.

Pat M. Neff and S. R. Scott, for the State. Allan D. Sanford and Etheridge & McCormick, for appellee.

JENKINS, J.

This is a suit in behalf of the state of Texas, brought by the county attorney of McLennan county to recover the penalty provided by statute for the violation of the anti-trust law of 1903. Laws 1903, c. 94. There were originally two suits; one alleging a contract of July 30, 1904, in violation of said statute, and one of December 19, 1904, to the same effect. Said suits were consolidated and tried as one. The appellant filed two trial amendments, after which the court sustained a general demurrer to the petition, and, the appellant declining further to amend, judgment was rendered for the appellee, from which judgment this appeal is prosecuted. Such being the case, the issue is: Did the petition, when taken together with the trial amendments, state a cause of action as against a general demurrer?

The petition, as amended, contained, substantially, the following allegations:

(1) The authority of the county attorney to institute and prosecute this suit.

(2) That the appellee, which will hereafter be referred to as the "Racine Company," at the times of the contracts subsequently alleged were made, and prior thereto, was engaged in the business of selling at wholesale in the state of Texas, including Waco, Tex., farming implements, buggies, etc. It was also alleged that said Racine Company was a manufacturer of such articles, and had a permit to do business in Texas, and had an office at Dallas, Tex.

(3) That at said dates, and prior thereto, the Bomar Hardware & Buggy Company, which will hereafter be referred to as the "Waco Company," was engaged in the hardware and implement business at Waco, Tex., selling articles of the kinds referred to in said contracts to the people of that city and vicinity, where there was a market for such articles, and where many citizens were engaged in the sale and purchase of such articles. That the Racine Company and the Waco Company on July 30, 1904, entered into a contract whereby the Racine Company sold to the Waco Company certain farm implements, etc., and agreed to sell to said Waco Company thereafter, as ordered, such implements as shown by their catalogue made a part of said contract, at the prices and upon terms therein named, to be shipped from Springfield, Ill., to Waco, Tex., there to be distributed among and to become a part of the stock of said Waco Company to be by it sold at retail, and that it was known by said Racine Company, and intended by them, that this should be done. That it was further provided in said contract that the Racine Company would not sell any of its said goods to any one else at Waco, Tex., and that the Waco Company would not buy goods of like character from any one else during the continuance of said contracts, to wit, from said July 3, 1904, to July 31, 1905, and that said parties entered into a like contract with each other on December 19, 1904, to remain in effect to July 1, 1905. Said contract is attached as an exhibit to said petition, and the goods mentioned therein include plows, harrows, stalk cutters, listers, middle breakers, corn and cotton planters, cultivators, wagons, drills, hay tools, and plow shares. Said contracts also contain the following clause: "The Racine Sattley Company agrees to give the party of the second part the exclusive sale of the goods of the class herein ordered in ____ for the season ending July 1, 1905. And the said second party hereby agrees not to buy or sell any other makes of like goods for the same period." Both contracts were alike in all respects, except as to the dates. The petition alleges that, though this blank was left in the written contract, it was intended and agreed by both of said parties that said contract was to be performed and carried out at Waco, Tex., and that it was so carried out at Waco, Tex., in pursuance of said agreement and contract.

(4) That it was the intention of both parties to said contract that it should be carried out and have effect in Waco, Tex., and to affect the market at Waco, Tex., and that, if said articles were interstate traffic when shipped, they lost such character when received at Waco, Tex., and the original packages were broken and mixed with the retail stock of the Waco Company and by it sold at retail, and that it was the purpose and intent of the Racine Company that this should be done.

(5) That said contracts were in violation of the anti-trust laws of this state in that: (a) They are exclusive in character and constitute a conspiracy in restraint of trade. (b) They prevented and lessened competition. (c) They created, and tended to create, a restriction in trade. (d) They created a trust and combination, prohibited by law. (e) They created and carried out a restriction in the free pursuit of business by each of said parties. (f) They regulated and limited the output in said articles. (g) They destroyed all competition in said articles. By either direct averment or by fair intendment, all of such purposes and effects of said contract are alleged to relate to the market at Waco, Tex.

(6) That one of said contracts and all negotiations leading up to the same was made at Racine, Wis., and that the other was signed at Waco, Tex., by the Waco Company and the salesman of the Racine Company, subject to the approval of the Racine Company, and that the same was afterwards approved by said Racine Company at Racine, Wis.

The court did not file its conclusions of law, and we are not advised, except inferentially from the propositions discussed by counsel in their briefs, upon what ground the court sustained the demurrer.

1. The demurrer for the purposes thereof admits the truth of the facts alleged in the petition. In testing the sufficiency of the petition on general demurrer, we must indulge in its favor every reasonable intendment arising from the allegations therein. Wiggins v. Bisso, 92 Tex. 219, 47 S. W. 638, 71 Am. St. Rep. 837; Comer v. Burton Lingo Co., 24 Tex. Civ. App. 251, 58 S. W. 970; State v. Railway Co., 99 Tex. 516, 91 S. W. 220; Raleigh v. Cook, 60 Tex. 441; Gas Co. v. State, 22 Tex. Civ. App. 118, 54 S. W. 291. Upon the authority of the cases above cited and upon those hereinafter referred to, we are of the opinion that, aside from the issue of interstate commerce, and the blank left in said contract, which are the only propositions referred to in the briefs herein, the petition states a good cause of action, upon a general demurrer, and we see no reason why it is not good, even on special demurrer. It undertakes to allege a conspiracy between the parties therein named to do, and that they did, the acts therein named, with the corrupt purpose and intent to effect that which is forbidden by the laws of this state and, while in civil actions great latitude is allowed in setting out the particular acts from which a conspiracy is to be inferred, the petition in this case sets out specifically the acts complained of, viz., the making and carrying into effect the exclusive contract of purchase and sale of the articles mentioned. Such articles being of prime necessity to the mass of the people, an exclusive contract in reference to the sale and purchase thereof, if made and carried out in a manner to injuriously affect the people of Waco and that vicinity, would have been indictable at common law. But our anti-trust statute has materially enlarged the doctrine of the common law as to monopolies and combines.

Under our statute the effect on the public of an agreement which is against public policy is not essential; the tendency is enough to bring it within the condemnation of the law. Brewing Ass'n v. Houck, 27 S. W. 696; Gas Co. v. State, 22 Tex. Civ. App. 118, 54 S. W. 293. In view of our anti-trust statutes and the decisions thereon, it cannot be doubted that it is the settled policy of this state to prevent restrictions in trade. "The law did not intend to regulate restrictions in trade, but to prohibit them entirely, without regard to their immediate effect on trade." Comer v. Burton Lingo Co., 24 Tex. Civ. App. 251, 58 S. W. 970. Our anti-trust statute, among other things, prohibits conspiracies in restraint of trade. A "conspiracy" is a combination between two or more persons to do an unlawful act, or to do a lawful thing in an unlawful manner. The statute declares, among other things, that "the following acts shall constitute a conspiracy in restraint of trade: Where two or more persons, firms, corporations or association of persons who are engaged in buying or selling any article of merchandise, produce or other commodity, enter into an agreement or understanding to refuse to buy from or sell to any other person, firm, corporation or association of persons any article of merchandise, produce or commodity." Again the statute declares: "That a trust is a combination of capital, skill or acts, by two or more persons, firms, corporations or association of persons for either, any or all of the following purposes: To create, or which may tend to create or carry out restrictions in trade * * * or to create or carry out restrictions in the free pursuit of any business authorized or permitted by law. * * * (3) To prevent or lessen competition in the * * * sale or purchase of merchandise. * * * (5) To make, enter into, maintain or carry out any contract, obligation or agreement * * * by which they shall, in any manner, affect or maintain the price of any commodity * * * between themselves and others, to preclude a free and unrestricted competition among themselves or others in the state * * * of any commodity." Acts 1903, pp. 119-121.

...