Trenton Potteries Co. v. United States, 219.

• Decision Date: 09 May 1924
• Docket Number: 219.
• Citation: 300 F. 550
• Parties: TRENTON POTTERIES CO. et al. v. UNITED STATES. [1]
• Court: U.S. Court of Appeals — Second Circuit

300 F. 550

TRENTON POTTERIES CO. et al. v. UNITED STATES. ^[1]

No. 219.

United States Court of Appeals, Second Circuit.

May 9, 1924

Indictment was under section 1 of the Sherman Act (26 Stat. 209 (Comp St. Sec. 8820)), and in two counts. The first count alleges in substance that numerous corporations and individuals, for the space of three years prior to the July term of 1922 unlawfully engaged with each other in a combination and conspiracy in restraint of interstate trade and commerce in sanitary pottery; all of the defendants being either manufacturers of or officers of corporations engaged in manufacturing pottery of that description. This count alleges that defendants, in pursuance of a common plan, fixed and exacted noncompetitive prices for the sale of said pottery in and among the several states, and 'to, into, and through the Southern district of New York'; further, they refrained from engaging in competition with each other as to the prices of said pottery, and within the period first above stated extended and carried out their conspiracy and combination 'within the Southern district of New York.'

The second count alleges that within and during the same period the defendants engaged in combination and conspiracy in restraint of interstate trade and commerce, and by virtue of and in pursuance thereof, and by common and concerted action within the Southern district of New York and elsewhere 'limited and confined their sales of sanitary pottery to a special group selected by said defendants by agreement, and known and denominated by them as legitimate jobbers'; further, in pursuance of this combination and conspiracy they refused to make contracts for the sale and delivery of such pottery to persons in the Southern district of New York except to 'such so-called legitimate jobbers.'

Such of the numerous defendants as were found guilty under this indictment brought this writ of error.

H. Snowden Marshall, of New York City, and Richard V. Lindabury, of Newark, N.J. (Edward L. Katzenbach, of Trenton, N.J., Max D. Steuer, of New York City, George H. Calvert, of Washington, D.C., and John W. Bishop, Jr., of Newark, N.J., on the brief), for plaintiffs in error.

David L. Podell, Sp. Asst. U.S. Atty., of New York City (William Hayward, U.S. atty., and Leland B. Duer, Nathan Probst, Jr., and Susan Brandeis, Sp. Asst. U.S. Attys., all of New York City, on the brief), for the United States.

Before ROGERS, HOUGH, and MAYER, Circuit Judges.

HOUGH Circuit Judge (after stating the facts as above).

It is not necessary to review the facts at large; sufficient to note that the subject-matter of prosecution is a trade agreement to maintain a central bureau of information, disseminate knowledge of prices, customers, discounts, etc., obtained thereby, and thus persuade or induce the large number of sanitary pottery manufacturers who belonged to the association to conduct their businesses in a reasonably uniform manner as to prices and discounts and protect the jobbers who constituted their largest normal 'outlet.' While differing in detail, the schemes condemned in Eastern, etc., Association v. United States, 234 U.S. 600, 34 Sup.Ct. 951, 58 L.Ed. 1490, L.R.A. 1915A, 788, and American Column, etc., Co. v. United States, 257 U.S. 377, 42 Sup.

Ct. 114, 66 L.Ed. 284, 21 A.L.R. 1093, may with sufficient accuracy be said to suggest the sort of combination alleged by the government to have been formed by these defendants.

The more material points for our consideration grow out of two facts: (1) That the indictment was found in the Southern district of New York, and contains numerous allegations of acts done within that district; and (2) that defendants are said to have been engaged in a conspiracy in restraint of interstate trade and commerce.

The question growing out of the first fact is this: Did the trial court err in instructing the jury in substance (though in several forms and at various times) that, if they found that the defendants did conspire to restrain trade, as charged in the indictment, then it was immaterial whether such agreements were ever actually carried out, whether the purpose of the conspiracy was accomplished in whole or in part, and whether (finally) 'any effort was made to carry' the object of the conspiracy into effect.

That as a general proposition of law under the Sherman Act this instruction was correct is a commonplace. Nash v. United States, 229 U.S. 373, 33 Sup.Ct. 780, 57 L.Ed. 1232. This is because, as the case cited puts it, conspiracy under the Sherman Act is punished on a common-law footing, and no overt act is necessary for conviction, because the offense is complete with the formation of the illegal meeting of minds; but we are persuaded that both the prosecution and the learned court overlooked the peculiarities of this case. None of the parties proceeded against lived within the Southern District; the indictment does not charge that any conspiracy was formed in that district; consequently there was no jurisdiction there to bring the indictment or there to try the case, unless it was shown that jurisdiction was conferred by the commission of an overt act within the Southern district. Easterday v. McCarthy, 256 F. 651, 168 C.C.A. 45.

The pleader understood this, for otherwise all the allegations concerning acts done in the Southern district in pursuance of the object of the conspiracy were mere surplusage. Why the United States was so anxious to institute and prosecute this case in the city of New York we do not know, but the frame of indictment compared with the undisputed facts show that New York was intentionally selected, and trial of these defendants in the Third circuit, where most of them resided, was sedulously avoided. Such a choice as this carried with it the burden of proving something done in the Southern district--i.e., an overt act-- justifying the finding of an indictment therein. The peculiarity of this transplanted litigation was overlooked below, and it was error, and very material error, to instruct a New York jury in so many words that it was immaterial whether any effort had ever been made to carry out the conspiracy complained of.

The second of the above facts raises the main point in the case, a matter urged throughout the trial and most frankly met by the presiding judge. Defendants insisted in various forms that, inasmuch as they were indicted under the Sherman Act, they could not be convicted thereunder, unless what they had done amounted to an unreasonable or undue restraint of trade in interstate commerce, Standard Oil Co. v. United States, 221 U.S. 1, 31 Sup.Ct. 502, 55 L.Ed. 619, 34 L.R.A. (N.S.) 834, Ann. Cas. 1912D, 734; United States v. American Tobacco Co., 221 U.S. 106, 31 Sup.Ct. 632, 55 L.Ed. 663. But the court ruled 'that the ideas suggested by the Supreme Court in the Standard Oil and Tobacco Cases * * * applied to actions of that character (i.e., the character of the Oil and Tobacco Cases), which were bills in equity,' and he held that said ideas 'have (no application) here unless we are to construe this (Sherman) act in a way that would render it as obnoxious to the Constitution and as incapable of enforcement' as the so-called Lever Act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, Sec. 3115 1/8e et seq.), considered in United States v. Cohen, etc., Co., 255 U.S. 81, 41 Sup.Ct. 298, 65 L.Ed. 516, 14 A.L.R. 1045. The matter was finally presented by the following request to charge:

'The essence of the law is injury to the public; it is not every restraint of competition and not every restraint of trade that works an

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