United States v. Standard Oil Company, 11365.

Decision Date19 July 1938
Docket NumberNo. 11365.,11365.
Citation23 F. Supp. 937
PartiesUNITED STATES v. STANDARD OIL COMPANY (INDIANA) et al.
CourtU.S. District Court — Western District of Wisconsin

W. P. Crawford, of Superior, Wis., John Henry Lewin, Hammond E. Chaffetz, W. B. Watson Snyder, and Grant W. Kelleher, Sp. Assts. to Atty. Gen., and John J. Boyle, U. S. Atty., of Madison, Wis., for the United States.

William J. Donovan, of New York City, Herbert H. Thomas, of Madison, Wis., J. Edward Lumbard, Jr., Ralstone R. Irvine, and Granville Whittlesey, Jr., all of New York City, and San W. Orr, of Madison, Wis., general counsel for defendants.

Louis L. Stephens, Buell F. Jones, Weymouth Kirkland, David Fisher, and John L. McInerney, all of Chicago, Ill., for defendants Standard Oil Co. (Ind.) and others.

W. P. Z. German and Alvin F. Molony, both of Tulsa, Okl., for Skelly Oil Co. and another.

Wm. Dewey Loucks and John F. O'Ryan, both of New York City, and E. C. Mead, of Tulsa, Okl., for Barnsdall Refining Corp. and another.

Ralph Horween, of Chicago, Ill., for Globe Oil & Refining Co. (Okl.) and others.

Rupert Thomas, Jr., and Bethuel M. Webster, Jr., both of New York City, for Edward L. Shea and others.

J. C. Denton and John P. Greve, both of Tulsa, Okl., and J. Craig McLanahan, of Baltimore, Md., for Mid-Continent Petroleem Corp. and others.

Don Emery, of Bartlesville, Okl., Amos L. Beaty, of Houston, Tex., Walter L. Barnes, of Des Moines, Iowa, and Rayburn L. Foster, of Bartlesville, Okla., for Phillips Petroleum Co. and others.

Louis Mead Treadwell, of New York City, for Socony-Vacuum Oil Co., Inc., and others.

Goldthwaite H. Dorr, of New York City, for Charles E. Arnott.

James J. Cosgrove and William H. Zwick, both of Ponca City, Okl., and Dan Moody, of Austin, Tex., for Continental Oil Co. and others.

Vinson, Elkins, Weems & Francis and Charles I. Francis, all of Houston, Tex., and Carl N. Hill, of Madison, Wis., for Pure Oil Co. and others.

Samuel A. Mitchell and Truman Post Young, both of St. Louis, Mo., for Shell Petroleum Co. and others.

G. T. Stanford, Roy T. Osborn, and Frederick Wood, all of New York City, for Sinclair Refining Co. and another.

J. H. Marshutz, of Milwaukee, Wis., for Wadhams Oil Co. and another.

Charles E. Gately, of New York City, E. L. Wingert, of Madison, Wis., Chas A. Frueauff, of New York City, and Theo. Brazeau, of Wisconsin Rapids, Wis., for Cities Service Co. and others.

STONE, District Judge.

Realizing the importance to the Government and the defendants of a correct decision of the questions raised on the motions after verdict, and being conscious of the responsibility necessarily cast upon the Court, I have made a careful and thoughtful restudy of the evidence as it applies to each defendant, separately and jointly. I have considered in detail the contentions of all the defendants as advanced in the motions after verdict, and have studied the many able briefs submitted on behalf of the Government and the defendants. This record runs to more than 12,000 pages, in addition to over 1,000 exhibits.

The convincing force of much of the testimony relates in widely varying degrees to different defendants. It shows that the defendants were in varying situations in relation to the acts complained of by the Government.

The trial lasted nearly four months, during all of which time the jury was kept sequestered and in the custody of the marshal. At the close of the trial there were presented motions in behalf of each defendant, requiring, for intelligent disposal, a complete knowledge of this monumental record as it applied to each defendant. I felt, then, that to have kept the jurors sequestered while each of these motions received full and careful consideration, would have been unjust and unfair to them.

The charge against the defendants lay in a field of economic controversy. Violations of the anti-trust laws are different from crimes which are mala in se. The Department of Justice has, in each case where it believes a violation has occurred, the choice of a civil or criminal proceeding. It recognizes that the rule of reason, long considered essential in administering the Sherman Anti-Trust Act, 15 U.S.C.A. § 1 et seq., makes sharply defined standards impossible.

In view of these circumstances, I concluded to let the case go to the jury as to all defendants, and after verdict to exercise, if necessary, the discretion of the Court to prevent any miscarriage of justice.

The indictment charged a conspiracy involving many persons, not all indicted. The acts proved were often known to but a few of the defendants. Many of the acts were innocent enough on their face, so that a defendant knowing only what appeared on the surface, might easily have drawn no inference of violation of law from the mere knowledge of the facts shown. The whole activity of a large part of a great industry in a large section of the country was involved. Legal purchases of gasoline in the ordinary course of dealing and running into millions of dollars were being made, along with the purchases in a much smaller volume that the Government has charged the defendants with having illegally made in the furtherance of the conspiracy. Letters, telegrams, telephone conversations and intra-company memoranda were shown having strong probative force as to some defendants, yet the contents thereof were wholly unknown to others. Large corporations with national distribution of gasoline were committed to a course or policy by agents or officials in charge of one department, where it is not at all clear that the responsible executive in charge of the entire company ever had any knowledge that a small portion of purchases here complained of had been made as a result of this conspiracy. Circumstantial evidence was adduced which applied with great force as to some defendants, yet had no probative force as to others.

As to a defendant shown by direct and positive evidence to have been a party to the conspiracy, or where as to a defendant the circumstantial evidence, properly applied, meets the required degree of proof, it is of course proper to view the record as a composite whole. To apply that rule in cases where there was otherwise no proof or, at most, very slight proof, would be a complete reversal of the American idea of justice. All of the evidence must also be viewed in the light of special circumstances claimed to apply in individual cases.

That the jury was in a position to make the complete and critical study of the proof as it applied to each defendant separately is at least doubtful. It has taken the Court a considerable time to do it with the aid of the record and briefs. The jury, acting in an effort to do justice, did get the larger view of the case, and is to be commended for its handling of a most difficult problem.

While I am satisfied that as to some of the defendants, as hereinafter pointed out, the verdict must stand, I am equally satisfied that as to the defendants, Dan Moran, Henry M. Dawes, Edward G. Seubert, Allan Jackson, Bryan S. Reid, Frank Phillips, W. G. Skelly, Jacob France, Charles L. Jones, A. V. Bourque and The Globe Oil & Refining Company (Kansas), there is no substantial evidence in the record fairly tending to sustain the verdicts of the jury, and as to these defendants the verdicts will be set aside and the indictment dismissed.

It is so ordered and adjudged.

I am also satisfied that in the light of the proof as a whole, but applied individually in the light of special circumstances shown as to them, which it would be fruitless to review here but which appear in the various motions and briefs, there is good reason to believe that certain defendants have not had an adequate separate consideration of their defense, in view of the fact that as to some of them direct evidence of participation was lacking or slight, and the circumstantial evidence viewed as a whole may well have obscured other facts and circumstances shown, in some cases, to be highly suggestive of innocence, and in all cases entitled to be considered and weighed. Once the jury arrived at the conclusion that a conspiracy to fix prices had been in operation, defendants as to whom only circumstantial evidence had been offered were naturally at a serious disadvantage in being charged and tried along with large corporations and other individuals definitely shown to have engaged in the conspiracy. Men who were employed by large corporations may well have had harmful inferences drawn from the fact that their employers, the corporations, participated in the conspiracy.

For these reasons and for many particular reasons set out in the motions and briefs, the verdicts will be set aside and a new trial granted to these defendants, and it is, therefore,

Ordered and adjudged that the verdicts as to defendants, Edward J. Bullock, A. G. Maguire, Harry D. Frueauff, H. E. Brandli, O. J. Tuttle, Harry J. Kennedy, C. B. Watson, J. W. Carnes, Edward L. Shea, Noel Robinson, J. W. Warner, E. B. Reeser, I. A. O'Shaughnessy, A. M. Hughes, Alexander Fraser, Cities Service Company, Barnsdall Refining Corporation, and Standard Oil Company (Indiana), be set aside, and said defendants are hereby granted a new trial.

Coming now to the remaining defendants tried and not heretofore disposed of, the indictment charges in general substance that the defendant major oil companies, acting through the defendant officers and others not indicted, formulated and carried into effect an unlawful conspiracy to fix prices of gasoline during a period from about March 1, 1935 to about August 1, 1936. The indictment sets out precisely the means by which the conspiracy was carried into effect, namely, two substantially simultaneous buying programs or pools, one in the so-called Mid-Continent field, and the other in the so-called East Texas field. The charge is that in each instance, for the purpose of artificially raising and fixing the price of gasoline at artificially high and non-competitive levels in...

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