United States v. Patterson

• Decision Date: 28 February 1893
• Docket Number: 1,215.
• Citation: 55 F. 605
• Parties: UNITED STATES v. PATTERSON et al.
• Court: U.S. District Court — District of Massachusetts

55 F. 605

UNITED STATES v. PATTERSON et al.

No. 1,215.

United States Circuit Court, D. Massachusetts.

February 28, 1893

Frank D. Allen, U.S. Atty.

Elihu Root and John D. Lindsay, (also in support of the indictment,) in the interests of certain private individuals.

H. W Chaplin, for defendants.

The sections of the statute immediately in question here are the following 'Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce along the several states or with foreign nations, is hereby declared to be illegal.

'Sec 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize, any part of the trade or commerce among the several states or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court.'

The first ten counts of the indictment are for engaging in a conspiracy in restraint of trade and commerce among the several states in violation of the first section of the act. The last eight counts are for a conspiracy to monopolize a part of the trade and commerce among the several states, in violation of the second section of the act.

The first half of each set of counts allege the conspiracy setting forth the means with various degrees of particularity, but without alleging overt acts. The second half of each set repeat the allegations of the first half, adding also allegations of overt acts.

In all the counts the conspiracy charged is described as being a conspiracy, (in the first set of counts in restraint of trade, and in the second set of counts to monopolize trade,) not by means of any contract or combination operating upon the parties to the conspiracy themselves, but by means of destroying or preventing the trade of others; so that the trade to be restrained was other people's trade, and the monopoly sought was to be secured by driving other people out of business.

The first count of each set charges that the object of conspiracy was to accomplish this end by fraud and misrepresentation, deceit, threats, intimidation, obstruction, and molestation, and other unlawful, oppressive, and vexatious means; the second charges that it was to be attained by preventing other persons from carrying on business; the third, that it was to be attained by preventing others from engaging in business by means of threats, intimidation, etc.; the fourth, that it was to be attained by preventing others from carrying on business by means of harassing and intimidating competitors, by threatening them, by causing them and their agents to be assaulted and injured, by inducing their agents and employes to leave their employment, by employing spies to obtain knowledge of their business secrets, by harassing and intimidating purchasers, by inducing purchasers to break their contracts and refuse to pay sums owing to competitors, by agreeing to maintain and maintaining persons so refusing to pay in the defense of suits against them, by delaying and impeding the progress of suits, by threatening prospective purchasers with annoyance, molestation, and injury in the event of their purchasing from competitors, by causing persons to call upon such purchasers repeatedly and unnecessarily to occupy their time, and dissuading and persuading them from buying from competitors, by causing great numbers of vexations and oppressive actions for the infringement of patents to be brought against such purchasers, by threatening intending purchasers from competitors with suits for infringement of patents, and thereby, and by other similar means, making it impossible for competitors to continue business; the fifth count of the first set gives the names of certain competitors who are engaged in interstate trade, and sets forth with still greater particularity the means by which it was the object of the conspiracy to destroy the business of those competitors.

First.

MEANING OF THE ACT.

In Heydon's Case, 3 Coke, 7, the barons of the exchequer lay down the following rules: 'For the sure and true interpretation of statutes in general, be they penal or beneficial, restrictive or enlarging of the common law, four things are to be discerned and considered: (1) What was the common law before the making of the act? (2) What was the mischief and defect against which the common law did not provide? (3) What remedy the parliament hath resolved and appointed to cure the disease of the commonwealth, and (4) the true reason of the remedy.'

These questions will be discussed in their order as relating to the statute now under consideration.

(A) STATE OF THE LAW BEFORE THE PASSING OF THE ACT.

Two questions naturally present themselves here: (1) What was the common law in regard to the subject-matter of the statute? and (2) what was the relation of the United States government and of the United States courts to that law?

The terms in the statute which naturally call for comment in this case, are the following: (a) 'Contract,' (b) 'combination,' (c) 'conspiracy,' (d) 'restraint of trade or commerce,' (e) 'trade or commerce among the several states or with foreign nations,' (f) 'monopolize.'

(a) 'Contract.' The meaning of this word is elementary, and it is not necessary to discuss it, except in connection with the following words, 'in restraint of trade.'

(b) 'Combination.' This word is used in the statute in a broader sense than the words 'contract' on the one hand and 'conspiracy' on the other. It has no technical, legal signification; and the words, 'combination in the form of trust or otherwise,' are intended to cover broadly any sort of a union of different persons, even though such union may not be sufficient to answer to the technical term 'conspiracy,' and may not include a binding contract. As modified by the subsequent words, 'in restraint of trade,' it refers to that class of cases where there is no binding contract, and perhaps includes certain cases in which there are no legal means contemplated so as to make it a conspiracy, and no sufficient union or agreement to make either a monopoly or a contract.

(c) 'Conspiracy.' This is a word of well-known legal signification. It is sometimes used to indicate simply the coming together and agreeing of persons, but in a penal statute is clearly to be construed as including the idea of illegality, created either by the illegal character of the ultimate object sought to be attained, or by the illegal character of the means by which it is contemplated that the desired result shall be accomplished, or both of these together. It is well settled at common law, and has been from early times, that conspiracies to accomplish a thing illegal in itself, and also conspiracies to accomplish a thing lawful in itself by unlawful means, are criminal. In U.S. v. Lancaster, 44 F. 896, the court say: 'A conspiracy is an unlawful confederacy or combination of two or more persons to do an unlawful act, or have accomplished an unlawful purpose. ' Com. v. Hunt, 4 Metc. (Mass.) 123; Rex v. Gray, 3 Harg.St.Tr. 519; Spies v.

People, 122 Ill. 212, 213, 12 N.E. 865, 17 N.E. 898; 3 Greenl.Ev. § 189; Washb. Crim. Law, (2d Ed.) 42, etc. It is unnecessary to enter with nicety into the question of just what ends or means are sufficiently unlawful to render a conspiracy criminal, since it is quite clear that a conspiracy which includes in the means for its accomplishment threats and intimidation, the committing of assaults, the maintenance of actions, and the inducing of parties under contract to break their contracts, is criminal in character. Nor is it necessary to endeavor to discriminate carefully between conspiracies which are civilly actionable and those which are criminal, since it is obvious that a criminal conspiracy is also civilly actionable if anything is done under it resulting in injury to the party complaining.

(d) 'Restraint of trade or commerce.' These words modify each of the words 'contract,' 'combination,' and 'conspiracy.' Taken in connection with the word 'contract,' they point to a well-known legal conception, viz. 'contract in restraint of trade.' A contract, the total effect of which is to restrain trade, is void; but if the restraint upon the trade of one party to the contract be no greater than is necessary to protect some interest of the other acquired by the contract, it is evident that the contract encourages the trade of one party as much as it restrains that of the other, and hence the public is not injured and the contract is valid. Upon this general principle it may be laid down that--

(1) An agreement for the restraint of the trade of one of the parties thereto is valid if limited, as regards time, space, and the extent of the trade, to what is reasonable under the circumstances of the case.

(2) An agreement for the restraint of the trade of one of the parties thereto is invalid unless so limited.

Gibbs v. Gas Co., 130 U.S. 396, 9 S.Ct. 553; Navigation Co. v. Winsor, 20 Wall. 64. See, also, Fowle v. Park, 131 U.S. 88, 9 S.Ct. 658; Craft v. McConoughy, 79 Ill. 346; Western Union Tel. Co. v. Burlington & S.W. Ry. Co., 11 F. 1, and note; Hilton v. Eckersley, 6 El.& Bl. 47, 66; Rousillon v. Rousillon, 14 Ch.Div. 351; Collins v. Locke, L.R. 4 App.Cas. 674; Mallan v. May, 11 Mees.&W. 653; Palmer v. Stebbins, 3 Pick. 188, 193.

It will be obvious that in the case put the trade is restrained by the provisions of the contract itself, and is necessarily the trade of one or more of the parties to the contract. A contract between A. and B. cannot, in and of itself, restrain the...