United States v. Schrader Son

• Decision Date: 01 March 1920
• Docket Number: No. 567,567
• Citation: 64 L.Ed. 471,40 S.Ct. 251,252 U.S. 85
• Parties: UNITED STATES v. A. SCHRADER'S SON, Inc
• Court: U.S. Supreme Court

252 U.S. 85

40 S.Ct. 251

64 L.Ed. 471

UNITED STATES

v A. SCHRADER'S SON, Inc.

No. 567.

Argued Jan. 22 and 23, 1920.

Decided March 1, 1920.

Messrs. Henry S. Mitchell, of Washington, D. C., and Solicitor General Alex. C. King, of Atlanta, Ga., for the United States.

[Argument of Counsel from pages 85-89 intentionally omitted] Mr. Frank M. Avery, of New York City, for defendant in error.

[Argument of Counsel from pages 89-94 intentionally omitted] Mr. Justice McREYNOLDS delivered the opinion of the Court.

Defendant in error, a New York corporation, manufactured at Brooklyn, under letters patent, valves, gauges and other accessories for use in connection with automobile tires, and regularly sold and shipped large quantities of these to manufacturers and jobbers throughout the United States. It was indicted in the District Court, Northern District of Ohio, for engaging in a combination rendered criminal by section 1 of the Sherman Act of July 2, 1890 (26 Stat. 209, c. 647¹), which declares illegal 'every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations.' After interpreting the indictment as indicated by quotations from its opinion which follow, the District Court sustained a demurrer thereto, basing the judgment upon construction of that act (264 Fed. 175):

'The ubstantive allegations of this indictment are that defendant is engaged in manufacturing valves, valve parts, pneumatic pressure gauges, and various other accessories; that it sells and ships large quantites of such articles to tire manufactures and jobbers in the Northern district of Ohio and throughout the United States; that these tire manufacturers and jobbers resell and reship large quantities of these products to (a) jobbers and vehicle manufacturers, (b) retail dealers, and (c) to the public, both within and without the respective states into which the products are shipped; that these acts have been committed within three years next preceding the presentation of this indictment and within this district; that the defendant executed, and caused all the said tire manufacturers and jobbers to whom it sold its said products to execute with it, uniform contracts concerning resales of such products; that every manufacturer and jobber was informed by the defendant and well knew when executing such contracts that identical contracts were being executed and adhered to by the other manufacturers and jobbers; that these contracts thus executed purported to contain a grant of a license from the defendant to resell its said products at prices fixed by it to (a) jobbers and vehicle manufacturers similarly licensed, (b) retail dealers, and (c) the consuming public; that all these contracts provided (that the) [concerning] products thus sold to tire manufacturers and jobbers (provided) that they should not resell such products at prices other than those fixed by the defendant. Copies of these contracts are identified by exhibit numbers and attached to the indictment. It is further charged that the defendant furnished to the tire manufacturers and jobbers who entered into such contracts lists of uniform prices, such as are shown in said exhibits, which the defendant fixed for the resale of its said products to (a) jobbers and vehicle manufacturers, (b) retail dealers, and (c) the consuming public, respectively; and that the defendant uniformly refused to sell and ship its products to tire manufacturers and jobbers who did not enter into such contracts and adhere to the uniform resale prices fixed and listed by the defendant. Further, that tire manufacturers and jobbers in the Northern district of Ohio and throughout the United States uniformly resold defendant's products at uniform prices fixed by the defendant and uniformly refused to resell such products at lower pricers, whereby competition was suppressed and the prices of such products to retail dealers and the consuming public were maintained and enhanced. * * *

'Thus it will be observed that the contract, combination or conspiracy charged comes merely to this: That the defendant has agreed, combined, or conspired with tire manufacturers and with jobbers by the selling or agreeing to sell valves, valve parts, pneumatic pressure gauges, and various accessories, with the further understanding or agreement that in making resales thereof they will sell only at certain fixed prices. It will be further observed that the retailers, to whom the jobbers in ordinary course of trade would naturally sell rather than to the consuming public, and who in turn sell and distribute these articles to and among the ultimate consumers, are not included within the alleged combination or conspiracy. * * *

'The so-called license agreements, exhibited with the indictment, are in my opinion, both in substance and effect, only selling agreements. The title to the valves, valve parts, pneumatic pressure gauges, and other automobile accessories passed to the so-called licensees and licensed jobbers.'

The Court further said:

'Defendant urges that there is a manifest inconsistency between the reasoning, if not between the holdings, of these two cases [Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373, 31 Sup. Ct. 376, 55 L. Ed. 502, and United States v. Colgate Co., 250 U. S. 300, 39 Sup. Ct. 465, 63 L. Ed. 992]; that if the basic principles a nounced in the latter case are to be taken in the ordinary sense imported by the...