Standard Oil Co. v. State ex rel. Attorney-General

Cook, J., delivered the opinion of the court. As we construe the bill of complaint in this case, it is evident that the pleader proceeded upon the theory that subdivisions “n” and “o” of section 1 of chapter 119 of [899] the Laws of 1908, taken in connection with the rule of evidence prescribed by the same section, rendered the doing, or the attempting to do, the things denounced by the subdivisions “n” and “o” ipso facto violations of the law. The rule of evidence is written this way: “And it shall be sufficient to make out a prima facie case of a violation of subdivision ‘n’ hereof to show a sale, or offer of sale, of a commodity at a lower price at one place in this state than another; or a violation of subdivision ‘ o ’ to show a lower charge for the services therein mentioned in one locality than another.” The rule of evidence is not a rule of pleading. It simply means that, when it is shown by the evidence that defendant has done or attempted to do the things denounced, it will be presumed that the act was done with the purpose or intention of destroying competition, and it would then be incumbent upon the defendant to show that the acts, if performed at all, were not designed to accomplish the purpose prohibited by the statute. But this rule of evidence does not absolve the pleader from charging, as a matter of fact, that the sales alleged to have been made were so made for the purpose of destroying competition. The bill does not so charge, and the demurrer should have been sustained. As this case must be reversed so that the pleadings may be amended, if the state desires to amend, we think it is proper, if not imperative, that we give the parties to this controversy our construction of the “anti-trust law” of this state, found in chapter 119 of the Laws of 1908. Subdivisions “j,” “k,” “1,” and “m” are directed generally at ‘ ‘ restraint of the freedom of trade or production,” monopoly of trade, engrossing or forestalling any commodity, and the destroying of competition by selling at a price below the normal cost of production. Then come subdivisions “n” and “o,” which denounce efforts to destroy competition in the manufacture or sale of a commodity, by selling or offering same for sale at [900] one place cheaper than at other places, and destroying competition by the rendering of service, or by manipulating, handling, or storing any commodity for a less price at one place than at other places, taking into consideration the difference of freights and other necessary expenses. The proof of any person, or corporation, having done the things denounced in subdivisions “n” and “o,” will make out a prima facie case against the person or corporation charged with violating these sections, and subject them to the penalties prescribed by the statute. The prima facie rule of evidence is in terms limited to subdivisions “n” and “o,” and has no application to any other subdivision of chapter 119. We are unable to see anything in this statute which is in violation of the national or state Constitution. We think the statute denounces all restraints of the freedom of trade, and is broad enough to cover every and all kinds of business dealings inimical to the general welfare of the people of the state. The subdivisions “n” and “o” so severely criticised here specify a common device resorted to by powerful financial combinations to temporarily destroy competition, and then to monopolize the business and recoup for former losses by later extortions. No calamity or injustice will follow the enforcement of the law, and if appellant has any defenses they are not barred by the statute. It will be easy to show that any legitimate reduction of prices was not made to destroy competition and create a monopoly, but in response to local conditions, or any other reasonable business policy. The purpose of the reduction of prices is the real test, and the prima facie case cannot disturb law-abiding defendants in possession of all the facts controlling seemingly unlawful acts. Only those who have willfully and knowingly violated the law, and who have earned the pains and penalties prescribed by law, need fear the test of explaining their acts. [901] For the reason that the hill of complaint does not charge that defendant reduced prices to destroy competition, and thereby create a monopoly, the decree of the lower court is reversed, and the cause is remanded, with leave to the complainant to amend the bill within thirty days from the filing of the mandate in the lower court. Reversed and remanded.