IN RE, CORNING.
205 al.
In re
CoRNING tt
UNITED STATES V. GREENHUT
et al.
(District Court, N. D. Ohio, E. D. June 11, 1892.)
1.
MONOPOLIES-CRIMINAL LAW-INDICTMENT.
An Indictment under the act of JUly 2, 1890, relating to monopolies, averred that defendants, in pursuance of a combination to restrain trade in distillery products between the states and monopolize the traffic therein, acquired by lease or purchase , prior to the passa/te of the act, some 70 distilleries, producing three quarters of tno distillery products of the United States, and that they continued to operate the same,after the passage of the law, and by cer,tain described means sold the product at increased prices. Held, that no crime was charged in respect to the purchase or continued operation of the distilleries, since there was no averment thatde!endants Qbli/PIted the vendors of the distilleries not to build others, Or to withhold their capital or experience from the business.! '
2.
S.
The indictment further averred that defendants, in pursuance of the combination, shipped certain of the products to Massachusetts, and sold them there through their , distribnting agents to dealers, who were promised a rebate of five cents per gallon on, their purchases, provided, sueb dealers' purchased their distillery products exclusively from the distributing agents, and sold them no lower than the prescribed list prices, said rebate to be paid when such dealers should sign a certificatl! that they h,ad 80 purchased and'sold for six months; and that by this means defendants had controlled and; increased the price of distillery products in Massachusetts. Held, that no crime was 'c\larged with respect to such sales, since there was no avertnent of any contract whereby the purchasers bound themselv,es not to purcllase from others, or not to sell at less than list prices. CRXMINAL LAW-FEDEluL COURTS-REMOVAL OJ!' PRISOSER.
SAME.
indictment, disregar,ding technical defects, but to refuse the warrant if the crime alleged is not triable in the district to which a removal is sought, or if the indict,ment fails ,to charge any offense under the law.
to, a distant state and district for trial, it is the duty of the court to scrutinize the
On an application to a federal court for the removal of a resident of the district
At Indictment against Joseph B. Greenhut and others for violating the law against monopolies. Heard on application for a warrant to re,Iuove defendants to another district for trial. Denied and prisoners discharged. Allen.T. Brinsmade, Dist. Atty., for the United States. Elihu RQot, Tho8. Tluitcher, and S. E. Williamson, for defendants. l
RICKS,District Judge. This cause comes before me upOD, the application by the district attorney for a warrant for removal to the district of Massachusetts of Warren Corning and Julius French, citizens of this judicial district, against whom is pending an indictment prefl;lrred by the United States in the district court for district of Massachusetts. A certified copy of the indictment, together with the return of A. J. WilHams, a United Statel! COU,lmissionerfor the circuit court of this dilltrict, that said defendants refulled to give bail, and were by him qOmmitted. is filed. The defendants object to the granting of a warrant for removal, theli\WB Of the because the indictment does not Qharge an offense Unite9-. ,States. Being residentsaQd citizens of this judicialdj,st#ct,' they ,l8oe U. s. sachusetts on motion to 50 Fed. Rep. 469. :for a4ecision iuthe district " of M&s.,
106
FEDERALREPORT)\:R, .vol. 51.
claim the right, upon this application, to challenge the sufficiency of the indictment, and insist thn.tilit'.;'s,tbedu'ty.ofthe district judge, before ordering the removal of a citizen to a distant district for trial, to scrutinize the indictment, and to ref:l;lSe the warl.1ant in cllf?eit appears upon the face of the indictment either that the crime alleged was not committed in the district to which the removal is asked, or that the indictment does not sufficiently charge an offense under the law, or for other material ,or in the act upon which it is fptirided. The defects "iIl.that order of removal is not a Illare ministerial act on the part of the district a judicial fUhc;ti<m,including the exercise of a l{)gal discretion,'uponthe papers presented in support of the. application. I fully conc'ur.'ip :the opinioQ DILl..OJ.ll aJ:ld TREAT in Re Buell, 3 Dill. 116.. , .' In that case, on the proposition tha t, the question ofthe sufficiency ofthe indictment was for the court in whicb it was found,and not .for the district judge on an application for the warrant of removal, 'Judge'Dn,. said:" .. '" to the proposition in the,bl'eailth claimed fQrit in the presentca:se."The provision dlJvnlves on a higb judicial officer of tile government duty. In a COUll try of such vast extent as ours, it is notaJightlllatter to arrest .a,supposed on the mete order of an inferior.' magistratl', remove him hundreds,it may be thousands. of miles for trial. proVides the previous oftha district judge to sucll remuv'al:' in anip4.ictrnent shbuld not be regarded; but a district judge wll0 order the, of ll:prisoner onl,. Oil or,s!Jown WIlBan mdlctm,ellt, anI! that mdictment failed to show an offense ilgainstthe United states. ."'" '" ., would misconcelve l'roLect .the of the Citizen." Ordinarily, where an offense charged' was committed in the district reside, th.e trial of the acwhere. one. or more of the ,sev:eral di'Strict of vthich he is or they are inhabitants. Where au Bffense, has :tieen committed iii severaldifterent'distticts; and 'the accused :reside in other and diflereht districts; the government has a right to elect in which one of the districts the prosecution may be. conducted;. and, uqder proper conditions; fuay elect t9 prosecute them in a district other than that in which they or either of thEmneside. There which would in a distrIctretnot'e', It'om that in ",hlch anyone of l\ 01 tlelendants refar 'reHiote from the district. where the prihCipal business of the ·. Buhhespirit ofotlHaws is to iNdict ami try of(enri?s' wberethe reside, if tl18,Qffense was coma?4iflocal inftl1endes and are not too obstUd!i¥tobeJjverMrne.' .... ..... ' '.··.. t.hfs .cllse"that,'if "Chllrges offen.se III tletW;' inidfn9st Jevery. otllet district of in:toe" some of and' in '6ne of w hil:!h'sevel'aJ of them reSIde and con.: that one of the delendants reSIdes m the southerndlstnctof New York, where
a
or
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IN BE CORNING.
207
many' transactions similar to those averred hi the inc1icttnerittake 'place; several reside in the southem district of Ohio; several reside in this district; and several reside in the northern district of Illinois, where the corporation was organized and has its legal residence, and conducts its principal business. In each of these four districts similar offenses were committed. These are not stated as reasons why they should not be removed for them in the trial, if, in fact, a sufficient indictment is pending district of Massachusetts, but rather as justifying a closer scrutiny into the indictment than if the only offenses committed were those alleged in this indictment, or the district of Massachusetts was the only place where the strong arm of the law could reach them. Does the indictment charge an offense under the act of July 2, 1890, known as "An act to protect trade and commerce,against unlawful restraints and monopolies?" The first section of the act declares illegal "every combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states, or with foreign nations." The second section declares that "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 commeroo among the several. states, or with foreign nations. shall be deemed. guilty of a misdemeanor." The indictment alleges that before the enactment of the law in question the defendants, for the purpose of monopolizing and restraining the trade and commerce in .distillery products amon!t the several states of the nation, cOI:i:lbined with others, and purchased or leased or otherwise obtained control of70 distilleries, which had theretofore been· competing, separate distilleries, and .so operated themaa to produce 77,000,000 gallons of distillery product, which output comprised about 75100 of the total production of the distilleries of the United States; and that the condition of trade in such products during the period charg;ed was such that the defendants, by means of their combination, were able to prevent free competition on the actual price of such'products, and thereby control the price, so as to augment and increase the price thereof to consumers inthe district of Massachusetts, and to restrain trade therein among the several states. The first count of the indictment alleges a combination on the part of the defendants to restrain the trade and commerce in the district of Massachusetts, and between that state and other states of the Union, in distillery products, of which it charges that defendants produced 75100 of the entire production of the United States, and avers that on October 3, 1890, they sold to Mills & Gaffield, in Boston, 5,642.82 gallons of alcohol, said alcohol being part of the product of. said distilleries, and made in Peoria, Ill., and intended to betransporte<;ll;lod sold to said Mills & Gaffield in Bostonj and with the intent to restrain the trade therein they fixed the price at which said Mills & Gaffield Sh01:M sell the same in the district of Massachusetts, ot:' for transportatiollto the other iltates, and did compel said Mills & Gaffield to sell said alcohol at·no less price than that fixed by the defendants; and, by reason of their.com-
20S
FEDERAL REPORTER ,
vol. 51.
..
the effect' of free competition on the usual price at which said products Nereso}d· in Massachusetts or for transportation to other states, and did and augment the price at which said products were sold in said state, and for transportation to other states, and did thereby exact and procure great sums of money from the citizens of said district, and thereby,: and by other means to the ;jurors unknown, restrain the trade and connnercein said produljts, between the state of Massachusetts and other states'of the Union. The second oountchargesthe defendants with combining and monopoliZing to themselves the trade, and commerce in distillery prod'ucts. It charges, in the same terms set forth in the first count, the purchase and lease of 70, distilleries, controlling 75-100 of the distillery products of the United States, which distilleries had been before that time competing producers; and with the same purpose,. to mo;nopolize, the trade in said products, they made 75-100 of the entire output of the distilleries; of the several, states; and with the intent of controlling the trade and price of said products in said state of Massaohusetts,'and between ·the several states, and of monopolizing the trade in said state and between· saidstat.6s, the 18th day of ::5eptember, 1890, sell to C. 1. Hood &;Co.,of Lowell; in said state, through Webb .& Harrison, as distributi'l1gagents for defendants, 526.52 proof gallons ofalcohol, and with intent to monopolize.said trade did then and thereby promise said Hood that if, lfor a certain time agreed upon, said Hood should purchase exclusively from the defendants his supplies of such goods as defendants were then making,and during that period should not aellsuchgoods at anylower prices than the list of the defendants' :distributingagents, and should subscribe to a certificate that he had purchased allsuchsupplies:from defendants, and had not sold the same at prices lower than their distributing agents had sold the same, then dMendal1ts would return to said Hood five cents per proof gallon 011 the goodssb purchased by Hood. On September 23; 1891, Kelly & Durkee having purchased from said Webb & Harrison, as distributing agents of defendants, 85.54 proof gallons of alcohol, said defendants, with intent to,and in pursuance of said attempt to monopolize the" trade, etc., did at Boston, on said date, promise Kelly & Durkee that, if for the period agreed on they purchased exclusively of one or more certain dealers named, their supplies ·of goOds then made by defendants, said dealers being thtln'distributing agents for 'defendants,ltod should not sell Bucligoods at'any lower prices than such dealers' list prices, which said defendantScbntrolledand fixed, and shouldoortify that they purohased an their distilleryj"products for said period from some one of the so named by defendants, and had not:· soldl a.ny .goods so pur::chased fait any lower 'prlceEitllan said dealE\;rs' list prices, with freight (if 'Iltny) pald,then saiddefendimts .would repay to said Kelly & Durkee fivecebtsfor each prGofgaUon pUTchased;'and that defendants, in pursuanee of said comblnation, did make other promises to Hood, to the
-:n'saM 'di'Strict or for transportation to other states, and did counteract
"Jination;said defendants did control the amount of said products sold
IN RE CORNING.
209
same effect, and also to Kelly & Durkee, and did thereby, in the way charged, attempt to monopolize the trade in said products in said district, and between the several states of the Union. The third count charges a combination in restraint of trade, alleging a transaction with Hood on October 2, 1891, involving purchases by him of 518.81 gallons of distillery products, under circumstances substantially the same as averred in the preceding counts; alleging that defendants promised Hood, six months from the date of said purchases, a rebate of five cents per gallon, upon conditions similar to those averred in the second count, and averring divers other similar contracts with Hood in the said district. And the fourth count avers that on the 7th day of May, 1892, said defendants entered into a certain contract in restraint of trade and commerce in distillery products among the several states, and especially in restraint 'of trade and commerce in Massachusetts and other states, with Kelly & contract ,was, in substance, that, for the pl1rpose of seDurkee, curing the continuous patronage of the purchaser, the defendants, six months atter date, promised to repay to Kelly & Durkee five cents per proof gallon of defendants' products then purchased, UpGD. condition thnt aaid purchasers or their successors, from date of voucher or purchase to payment, shall buy exclusively such kind of goods as are produced by defendants from some one of their agents designated, and shall not sell ilie same at prices lower than said dealers' list prices, and shall certify to that effect, said defendants acting in the name of the Distillery & Cattle Feeding Company, being from the 22dof September, 1891, up to thefind'iiig of the indictment, manufacturers of said distillery products within certain states of the United States other than Massadhusetts, and the kind of goods referred to in said contract being distillery products,said Kelly & Durkee having on the said 7th day of May compliedTwith all the conditions of said contract. The first, third, and fourth counts are based on the first section of the act, and charge a combinationand conspiracy in restraint of trade, while the second count charges !i.bombination to monopolize a part of the trade in distillery produces between the states. Now, giving to this indictment the broadest posslble construction; giving to the facts therein set 10rth and to the acts committed the meaning most favorable to the prosecution,-what is the offense charged? It is that the:defendants, prior to the act of July 2, 1890, by lease or purchase, acquired some 70 distilleries throughout the several states of the Union; and from them produced 77,000,000 gallons of distillery products; ,ihich then constituted 75-100 of the entire distillery products of the United States, and that' they continued to operate said distilleries on the same extended scale after the act became a law; that part of these products were shipped to the district of Massachusetts, to be sbld there arid for transportation to other states, and sold by thi:l defendants, through their 'distributing agents, to dealers in Massachusetts, uhder a promise on the part of the defendants that if said dealers should purchase 'their distillery products exclusively from the v.51F.no.5-14
of
210
P'EDERALltEl'ORTER ,vol.
51.
l:iifltributitig..agents ,sell: ,the same at pnice8n6t lower tbllll.·;heJi$t prictJ8.ofsuch a?d should at the expiration of six: IDppt\1S. after such certIfy thattbay .had so exclUl'!ively purchased from and had so sold then .defendants would ,r.ay to such per gallon on .aUtheir,!mrcbases·. The indictment averstbat at which said products sold than .hadt before that tilne: prevailed, and thatbysai<lla1;rangement'defendantscontrolled anQ.augmentedthe prices ofsaid produGts, and by saidimeans eXl;Lcted from the people \)fthe of Massachusetts a large amount of money over and above that usually received ',', " for such. products. These ara· the Biubsta,n]ial facts relied upon to constitllte the, crime. Of .COTI1'8a. it isallegeli., ;lV.ith. the usual.particularity, that all this. was done in :combinat!on, to restrain, trade between the states, .and"t'O to thetraflic,i ll "the several states in., d,iatillery,ppo!lucts, and done ,with ,the inten,t: purpose to at which they control the.productiqnpfsaid articles .a,ndfix the to an unlawful intent, should be so'd., Btltit. is not of bUl;linessis in restraint or to aver that f\.(lOmbination or a ,of trade, or Il, monopoJy trade" to ,constitute Acts relied upon to maketheqfie,l1E\e must be;l!,t!lted. Acoml:>ination ofact.and intent is needed to 'COllfiltitute n crime·. ,NQ avermentofintent alone 18 8ufIk1entjneith'Ell:,ia,anyamount of l\ct81onej the tWO,lllust combine. AS8ar:ningan ,unlawLu]iptent and purpose of aCRmbination to restrain trade and monopolize trame in these distillery pr.Qducts,as charged in the indictment, do aqts set, forth, constitute sucb 'restraipt and mo.nopoly?In what the sales.made. as charge?, restrain traq'e or monopolize the in distillery: products? These terms, ,liS used in the act of CQngress under consideration, are well at common .law, and must be considered with, reference to such. established meaning. The indhltment waS prepareg; with great care by attameyof and it is safe to assume that he has charged therein all the acts which he believed it possible to prove upon'the trial. Assuming this to be true, thE!' is significant in what it omits to· charge in the respects above refer;ra4 to.. It is not .averred that, when defendants purchased their 70 they obligated the vendors not to build btherdil!tilleries, or not to continue in the distillery :business in the future. It is not a,Vllrreq that defendantsattempte<l in .any way to bind the vendors ,to their capital or skill or expe.rien,ce<in the business .fmm. the public .hithe future. There is no aver:melit that the defenda;nts in any or at any attempted to . control the business of the, one fourth .of the distilleries in the United States, br in any ,way atterpPtedto .limit their output, .or by agree, '"ment with them controL the :pr.ipe.atwhich their product8$hould be sold, or in any: degreerestrai.ntheir:ira <ie, or limit the territory over full scope of the averments in which their tradesbould extend., · this respect is that .before this ,law: ,was by congress the' defendI.,
IN ItE CORNING.
211
ants legally purchased with their own capitaUhreefourths of the eries in the United States, and that they produced 77,000,000 gallons of distillery products, and sold these products in the markets of the several states at the best possible prices; and that they continued so to own and operate said distilleries, and so to sell their products, after the passage of this act. This they did without any attempt at any time, by contract, to control the production of the other distilleries, or the prices at which they should seU, or without any contract with such distillers in any way restraining trade; The indictment, therefore, in my judgment, wholly fails to charge a crime, so Jar as the purchase of said distilleries or their n1anufacture of distilled products before the passage of the act is concerned, or so far as they are charged with continuing to of the act. own and operate them with unlawh.l1 intent after the Do the acts, in connection with the transportation and sale of said products in the district of Massachusetts as charged, constitute an offense? The substantial facts in this respect, as averred, are that defenddistributing agents, ants soldthilir products in Massachusetts. to dealers there, who were promised a rebate .of five cents per gallon on all their purchases, provided said dealerspurehased tiJdr distillery products exclusively from defendants' agents, and provided they s,old the saine at prices no lower' than the list prices of such agents; and said rebate was to be paid when the dealers should sign a certificate that they had so exclusively purchased from defendants' agents,lllld had so at prices rio lower than the list prices of said agents. The indictment in these averments is again significant for itsomissiolls. It fails to charge a contract on: the part of the dealer that he would not purchase distillery products from other distilleries, or any contract on his part binding himself to sell at defendants' prices. Such dealers were otrered the rebate as an inducement to purchase exclusively from the defendants, and to sell at the prices defendants fixed ; but there is no contract averred by which the dealers obligated themselves to do so. In what respects, thell, are these sets chnrged different from the customary etI'ortsof manufacturers or dealers to increase the sale of their products and push their business by the many artifices of trade? There are no contracts averred, as between the defendar,ts and their cnstomers, which are in restraint of trade. Their Q,<'ts are rather intended to increase their trade. but not· by restraining the liberty of the customer to deal with others, if he wishes to, or can do so, with advlllltage to himself. If these acts are illegal and in restraint of traJe, and if they constitute a monolJoly undt:r this act, it may well be denominated an act to restrain legitimate enterprise, and limit and qnalify the ownershi p in property. The acts charged are common and frequent to many are guilty in branches of manufacture and trade, .and if the the mannerofnlaking sales of their products, as set forth in the indictment, the act is more: sweeping in its provisions than ever contem plated .by oongreiSR"oa mnQifestly appears from the debates in the senate when it for consideration. From those debates it the act that the congress did not intend to limiUhe aU1011,nt of capital a.citizen
212
J'EDERAL REPORTER,
invest in any line restrain his energy or· enterprise inacquirtrilt for himself all the trade possible in such business, provided in doing so he did not\ by illegal contracts or devices, restrain others frdm pursuing the same business, or deprive the public from enjoying the 'advantages 6f the freo use of capital, skill, and experience of competitors,' I am therefore of the opinion that as to the manner in which the defendants made the sales of, their products, so far as their acts a1"e 8t,t out in the indictment, there is no restraint of trade or monopoly shown, and there is no crime stated or charged. The indictment is therefore insufficienUn charging a crime as to either the purchase and nse of the distilleries or as to the sale of their It was contended by counsel that, after these products reached the state of'Massachusetts, they became property owned and held by the defendants under the laws of that state, and what was done with ,8uch products thereafter in that state did not in any way relate to commerce between the states, and the act of congress could not be held to apply to snch sales. It was farther urged that; if congress intended to say that the acquisition of these distilleries, by. purchase or lease, by the defendants, ·before the act was pas.sed, was a crime, such act was unconstitutibnal;' because ex p08t facto in its character. It was further contended that if 'Congress meant to defineasa monopoly-and therefore as a crime -:-'"the acqUisition by the defendants of the large number of distilleries allegE!din the indictment,when such ownership or control was lawful in the' states' where they were soowned,then congress· exceeded its powers, and such act is void; But I have not deemed it necessary to .pass upon I have carefully considered all the acts and unlawful comhinationsset: forth in the indictment in the first, third, and fourth counts,and, for the reasons hereinbefore stated, I am satisfied they .are insufficient to make out the crime co'vered by the tirst section of the act, viz., a cbmbination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states; and giving to the word "monopoly" its cbmmon·law meaning, which is the meaning congress clearly intended.· I find the allegations in the second count insufficient to make out the crime covered by the second section of the act, viz., a combination or conspiracy to monopolize any part of the traue or commerce between the states. ' Inreachidgithis conclusion, I am relieved to know that if I am in error the:governl1lent can speedily protect the public from this alleged monopoly ])y 8; civil proceeding in .any district in the United States in which the defendants transucHheir business. The act of congress wisely madespeCiaJ. provision for just such civil suits, and· conferred jurisdiction upon the cirCUit courts of..,the United States to enjoin ,parties Jrom carryirig 011 any monopoly or business in restraintof trade. The districtattorneys of the United States, .bypermissioI',l of the attorney:general, may institute such proceedings in equity in . any district where proper service of process can be obtained upon any of the defendants, and provisions are nlade for speeding lmch cases to an early hearing. A suit ·ofthis nature was lately instituted in the United States circuit court
IN RE TERRELL.
213
o,t Nashville, Tenn., by the United States through its district attorney, and against an illegal coal monopoly, doing business under tion clearly differing from this case, and manifestly illegal; and that company was enjoined from doing business, and the public in that suit protected againl3t the high prices in coal which resulted from a contract held illegal under this act. If, therefore, the attorney general of the United States should deem it proper to further test the question of whethe,r the business of the defendants in this case is a monopoly, or in restraint of trade, he may authorize such a civil proceeding to be instituted, and by such suit speedily secure an adjudication from the circuit courts as to the effect and scope of this act. Inasmuch as these ants were legally engaged in this extended business before the act of congress was' pal;lsed, it would be fair and proper to proceed against them first byauoh civil suit. The public would be better protected, and more promptly benefited, by such proceeding, because it could be speedily heard, ftn,d reliefbe effectually granted, by an injunction restraining such business, land destroying the monopoly, if such the court should adjudge it to be. The warrant for removal will therefore be denied, and the' defendants· dis,charged from further custody.
TERRELL.
UNITED STATES '11. GREENHUT
etal.
(ctMUU Oourt, S. D. New York. June 28, 1892.) L CRIMINAL LAW..,.,HABEAS CORPUS-JURISDIOTION OF CIROUIT COURTS-REMOVALOJr PRISOKER. ,
Where a prisoner, arrested under warrant based upon an indictment in a distant state and district, is held pending an application to the district court for a warrant of removal for trial, the circuit court of the district in which he is' held has authority on habeas corpus to examine such indictment, and to release the prisoner, if in.its the indictment should be quashed on demurrer. An indictmentlinder the act of July 2, 1890, relating to 'monopolies, averred in the fourth count that ,defendants, in pursuance of a combination to restrain trade in distillery products between the states, shipped certain Whisky to Massachusetts, and sold it there through their distributing agents to dealers under a Contract whereby said dealers were promised a rebate of five centil per gallon on their purchases, providing such dealers purchased their distillery products exclusively from the distributing agents, and sold them no lower than the prescribed list prices; said rebate,tQ\Ie paid,when such dealers should sign a certificate that they had so for six months; and that by this means defendants had controlled and increased the price of distillery products in Massachusetts. HeW, that no orilna fYas charged with respect, to such sales, since there was /10 averment of any contract whereby the dealers bound themselves not to purchase from others, or not to sell at less than list prlces. In re CornVng, 51 Fed. Rep. 205, approved.
9.
ILLEGAL COMBINATIONS-CONTRAOTS IN RESTRAINT OF TRADE-INDICTMENT.
, Petition byl,IerbertL. Terrell for a writ of habea.s COTpUB. . ' Tho8. Thacher and Elihu Root, for petitioner.
Prisoner