United States v. National Association of Real Estate Boards

Citation94 L.Ed. 1007,70 S.Ct. 711,339 U.S. 485
Decision Date08 May 1950
Docket NumberNo. 428,428
CourtU.S. Supreme Court

Messrs. Peyton Ford and Victor H. Kramer, Assts. to the Attorney General, for the United States.

Mr. William E. Leahy, Washington, D.C., for appellees Washington Real Estate Board et al.

Mr. Roger J. Whiteford, Washington, D.C., for appellees National Association of Real Estate Boards and Herbert U. Nelson.

[Argument of Counsel from page 486 intentionally omitted] Mr. Justice DOUGLAS delivered the opinion of the Court.

This is a civil action brought by the United States to enjoin appellees1 from engaging in a price-fixing conspiracy in violation of § 3 of the Sherman Act, 26 Stat. 209, 15 U.S.C. § 3, 15 U.S.C.A. § 3.2 The core of the case is the charge that the members of the Washington Real Estate Board combined and conspired to fix the commission rates for their services when acting as brokers in the sale, exchange, lease and management of real property in the District of Columbia.

The same conspiracy was charged in a criminal proceedings.3 The criminal case was tried first. At the end of the Government's case the court granted the defendants' motion for a judgment of acquittal. D.C., 80 F.Supp. 350. Appellees then moved for summary judgment in this civil suit, contending that the judgment of acquittal in the criminal case is res judicata here. That motion was denied.4

The civil case was then tried. It was stipulated that the trial would be on the record in the criminal case, the United States reserving the right to offer additional exhibits. No evidence was offered by appellees. The court entered judgment for the appellees, holding that the agreement to fix the rates of brokerage commissions, which had been shown, was not a violation of the Act. D.C., 84 F.Supp. 802. The case is here on appeal. 32 Stat. 823, 62 Stat. 989, 15 U.S.C. § 29, 15 U.S.C.A. § 29.

First. The fact that no interstate commerce is involved is not a barrier to this suit. Section 3 of the Sherman Act5 is not leveled at interstate activities alone. It also puts beyond the pale certain conduct purely local in character and confined to the District of Columbia. That Congress has the power so to legislate for the District by virtue of Art. I, § 8, Clause 17 of the Constitution and did so by § 3 was settled by Atlantic Cleaners & Dyers v. United States, 286 U.S. 427, 432—435, 52 S.Ct. 607—609, 76 L.Ed. 1204.

Second. The Washington Board has adopted standard rates of commissions for its members—charges which cover the wide range of services furnished by a real estate agent. The Board's code of ethics provides that 'Brokers should maintain the standard rates of commission adopted by the board and no business should be solicited at lower rates.' Members agree to abide by this code. The prescribed rates are used in the great majority of transactions, although in exceptional situations a lower charge is made. But departure from the prescribed rates has not caused the Washington Board to invoke any sanctions. Hence the District Court called the rate schedules 'non-mandatory.'

Enough has been said to show that under our decisions an illegal price-fixing scheme has been proved, unless the fixing of real estate commissions is not included in the prohibitions of § 3 of the Act. Price-fixing is per se an unreasonable restraint of trade. It is not for the courts to determine whether in particular settings price-fixing serves an honorable or worthy end. An agreement, shown either by adherence to a price schedule or by proof of consensual action fixing the uniform or minimum price, is itself illegal under the Sherman Act, no matter what end it was designed to serve. That is the teaching of an unbroken line of decisions. See United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218 et seq., 60 S.Ct. 811, 841 et seq., 84 L.Ed. 1129; United States v. Paramount Pictures, 334 U.S. 131, 142, 143, 68 S.Ct. 915, 921, 922, 92 L.Ed. 1260. And the fact that no penalties are imposed for deviations from the price schedules is not material. See Eastern States Lumber Assn. v. United States, 234 U.S. 600, 608—609, 34 S.Ct. 951—953, 58 L.Ed. 1490, L.R.A.1915A, 788; American Column & Lumber Co. v. United States, 257 U.S. 377, 411, 42 S.Ct. 114, 121, 66 L.Ed. 284, 21 A.L.R. 1093; Federal Trade Commission v. Pacific States Paper Trade Assn., 273 U.S. 52, 62, 47 S.Ct. 255, 257, 71 L.Ed. 534. Subtle influences may be just as effective as the threat or use of formal sanctions to hold people in line.

Third. The critical question is whether the business of a real estate agent is included in the word 'trade' within the meaning of § 3 of the Act. The District Court thought not. It was of the view that where personal services are involved, a combination to fix the price or compensation is legal. It seemingly was influenced by the declaration in § 6 of the Clayton Act, 38 Stat. 731, 15 U.S.C. § 17, 15 U.S.C.A. § 17, that 'the labor of a human being is not a commodity or article of commerce * * * nor shall such (labor) organizations, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws.' But we think it a misconception to assimilate the services involved here to those of employees or to compare the present case to those involving the application of the antitrust laws to labor unions. Cf. Apex Hosiery Co. v. Leader, 310 U.S. 469, 60 S.Ct. 982, 84 L.Ed. 1311, 128 A.L.R. 1044; United States v. Hutcheson, 312 U.S. 219, 61 S.Ct. 463, 85 L.Ed. 788. We do not have here any more than we did in American Medical Ass'n v. United States, 317 U.S. 519, 63 S.Ct. 326, 87 L.Ed. 434, or United States v. Women's Sportswear Mfrs. Ass'n, 336 U.S. 460, 69 S.Ct. 714, cf. Columbia River Packer's Ass'n v. Hinton, 315 U.S. 143, 62 S.Ct. 520, 86 L.Ed. 750, an aspect of the employee-employer relationship to which the antitrust laws have made special concessions.

Members of the Washington Board are entrepreneurs. Some are individual proprietors; others are banks or corporations. Some may have no employees; others have large staffs. But each is in business on his own. The fact that the business involves the sale of personal services rather than commodities does not take it out of the category of 'trade' within the meaning of § 3 of the Act. The Act was aimed at combinations organized and directed to control of the market by suppression of competition 'in the marketing of goods and services.' See Apex Hosiery Co. v. Leader, supra, 310 U.S. at page 493, 60 S.Ct. at page 992.

Justice Story in The Schooner Nymph, 18 Fed.Cas. No. 10388, pages 506, 507, while construing the word 'trade' in the Coasting and Fishery Act of 1793, 1 Stat. 305, said,

'The argument for the claimant insists, that 'trade' is here used in its most restrictive sense, and as equivalent to traffic in goods, or buying and selling in commerce or exchange. But I am clearly of opinion that such is not the true sense of the word, as used in the 32d section (46 U.S.C.A. § 325). In the first place, the word 'trade' is often, and indeed generally, used in a broader sense, as equivalent to occupation, employment, or business, whether manual or mercantile. Wherever any occupation, employment, or business is carried on for the purpose of profit, or gain or a livelihood, not in the liberal arts or in the learned professions it is constantly called a trade. Thus, we constantly speak of the art, mystery, or trade of a housewright, a shipwright, a tailor, a blacksmith, and a shoe-maker, though some of these may be, and sometimes are, carried on without buying or selling goods.'

It is in that broad sense that 'trade' is used in the Sherman Act. That has been the consistent holding of the decisions. The fixing of prices and other unreasonable restraints have been consistently condemned in case of services as well as goods. Transportation services, United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290, 312, 17 S.Ct. 540, 547, 41 L.Ed. 1007; United States v. Joint Traffic Ass'n, 171 U.S. 505, 19 S.Ct. 25, 43 L.Ed. 259, cleaning, dyeing, and renovating wearing apparel, Atlantic Cleaners & Dyers v. United States, 286 U.S. 427, 52 S.Ct. 607, 76 L.Ed. 1204, the procurement of medical and hospital services, American Medical Ass'n v. United States, supra, 317 U.S. 528, 63 S.Ct. 328, 87 L.Ed. 434, the furnishing of news or advertising services, Indiana Farmers Guide Pub. Co. v. Prairie Farmer Pub. Co., 293 U.S. 268, 55 S.Ct. 182, 79 L.Ed. 356; Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013,—these indicate the range of business activities that have been held to be covered by the Act. In Atlantic Cleaners & Dyers v. United States, supra, 286 U.S. 435, 437, 52 S.Ct. 609, 610, 76 L.Ed. 1204, the Court rejected the view that 'trade' as used in § 3 should be interpreted in the narrow sense which would exclude personal services. It held, speaking through Mr. Justice Sutherland, that § 3 used the word in the broad sense in which Justice Story used it in The Schooner Nymph, supra. Chief Justice Groner made an extended analysis and summary of the problem in United States v. American Medical Ass'n, 72 App.D.C. 12, 110 F.2d 703, 707—711, where the Court of Appeals for the District of Columbia held that the practice of medicine in the District was a 'trade' within the meaning of § 3 of the Act. Its conclusion was that the term included 'all occupations in which men are engaged for a livelihood.' We do not intimate an opinion on the correctness of the application of the term to the professions. We have said enough to indicate we would be contracting the scope of the concept of 'trade,' as used in the phrase 'restraint of trade,' in a precedent-breaking manner if we carved out an exemption for real estate brokers. Their activity is commercial and carried on for profit. The fact that no goods...

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