Webb-Crawford Co. v. Federal Trade Commission

• Citation: 109 F.2d 268
• Decision Date: 23 February 1940
• Docket Number: No. 8969.,8969.
• Parties: WEBB-CRAWFORD CO. et al. v. FEDERAL TRADE COMMISSION.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

109 F.2d 268 (1940)

WEBB-CRAWFORD CO. et al. v. FEDERAL TRADE COMMISSION.

No. 8969.

Circuit Court of Appeals, Fifth Circuit.

January 30, 1940.

Rehearing Denied February 23, 1940.

Max Michael, of Athens, Ga., and Edgar Watkins, of Atlanta, Ga., for petitioners.

W. T. Kelley, Chief Counsel, Federal Trade Commission, and John Darsey, Sp. Atty., Federal Trade Commission, both of Washington, D. C., for respondent.

Before FOSTER, SIBLEY, and HOLMES, Circuit Judges.

SIBLEY, Circuit Judge.

The Webb-Crawford Company, a corporation, and Ed D. Wier, E. L. Wier, and Carter W. Daniel, who trade under the name Daniel Brokerage Company, bring under review, 15 U.S.C.A. § 21, 28 U.S.C.A. § 225, an order of the Federal Trade Commission which commanded that "The Webb-Crawford Co., its officers, representatives, agents and employes, and Ed D. Wier, E. L. Wier, and Carter W. Daniel, either in their capacities as partners in Daniel Brokerage Company or in their individual capacities, in connection with the purchase of commodities in interstate commerce by The Webb-Crawford Company, do forthwith cease and desist from accepting or receiving from sellers any fees or commissions or brokerage or any allowance in lieu thereof." The Commission by cross petition asks us to command obedience to the order.

There are contentions that some of the findings of fact are unsupported by evidence and other facts are not found which the evidence proves. It is also urged against the order that there is no finding that the condemned practice had an injurious effect upon competition, or that this proceeding would be in the interest of the public as required by statute; and that the complaint does not make the issues adjudged. Lastly, it is urged that the order, resting on subsection (c) of Section 2 of the Clayton Act as amended by the Act of June 19, 1936, 49 Stats. 1526, 15 U.S.C.A. § 13, denies due process of law as here interpreted and applied.

The complaint in its last paragraph alleges that payment by sellers to and acceptance by Ed D. Wier, E. L. Wier, and Carter W. Daniel of fees and commissions is in violation of Sect. 2, subsection (c) of the statute, they being the majority stockholders, the officers and directors of the buyer, The Webb-Crawford Company. The cease and desist order is supported by and substantially pursuant to the complaint.

The complaint rests squarely on subsection (c) of Section (2) of the Clayton Act, and the authority to enforce it granted to the Commission in Sect. 11, 15 U.S.C.A. §§ 13(c), 21. Section 5 of the Federal Trade Commission Act, 15 U.S. C.A. § 45, relates to orders against unfair methods of competition, and as to those a finding that proceedings would be in the public interest is made an element. That Section is inapplicable here. While subsection (a) of Section 2 of the Clayton Act as amended, 15 U.S.C.A. § 13(a), makes necessary a finding that the discrimination therein condemned affects competition or tends to create monopoly, subsection (c) mentions no such element. Subsection (a) begins: "It shall be unlawful for any person engaged in commerce, in the course of such commerce", to do certain things. Subsection (c) begins with the same words, thus taking a fresh start and by an entirely independent paragraph and without any such qualification condemns other things. The Congress considered the effect on commerce of the things named in subsection (c), and absolutely prohibited them. The Trade Commission is not to enter on any enquiry about their evil effect, nor whether a proceeding would be in the public interest. Its duty is to enforce the prohibition.

We need not consider in detail the attacks upon the findings of fact. It is wholly undisputed that Ed D. Wier, E. L. Wier, and Carter W. Daniel are partners in the brokerage company, and that they own ninety-five percent of the stock of The Webb-Crawford Company, the first named being the corporation's president and salesman, the second its vice-president and its buyer, and the third its secretary and treasurer and financial manager. They constitute its Board of Directors and completely control it. The brokerage partnership is managed by C. R. Daniel, a brother of Carter W. Daniel and a small stockholder in The Webb-Crawford Company. He has his brokerage office in the warehouse of that Company, paying rent for it. The brokerage partnership represents only sellers and is paid only by them. It has many other customers beside The Webb-Crawford Company, and The Webb-Crawford Company buys not over ten percent of its goods through the partnership. It seems to us that the Board was not justified in finding that the partnership was controlled by The Webb-Crawford Company, but that the reverse is true, that the partners could and did control the corporation. It is not the case of a dummy broker really acting for the buyer. The Webb-Crawford Company did not get...